Alan Inskip, Tempcover CEO & Founder, displays on the previous yr and shares his predictions for the trade within the yr to return.
One other yr has handed and Covid nonetheless continues to make shopper tendencies unpredictable and enterprise planning tougher than ever. And it’s no completely different for the insurance coverage trade which, within the face of the pandemic, is making strides in reversing the notion that it’s nonetheless caught in its previous methods of working beneath the confines of a cumbersome and rigid mannequin.
Right here is my high decide of tendencies to observe within the trade.
It takes partnerships to win new enterprise and enhance customer support
InsurTech firms, which offer fully-digital UBI merchandise similar to non permanent automotive insurance coverage, have been capable of swiftly adapt to market adjustments and meet new shopper demand immediately. At face worth this may increasingly paint a bleak image for conventional insurers, however scratch deeper via the floor and there may be an thrilling new period of chance awaiting the motor insurance coverage trade.
We all know that the massive insurers lack the agility to reply swiftly in accordance with unpredictable market tendencies, and that is the place smaller InsurTech companies can show to be invaluable companions, as they’re on the coronary heart of the digital UBI product revolution.
They’ve the proprietary expertise and skillset to create bespoke digital merchandise for the massive insurers, thereby enabling them to maintain up with the trade disruptors via collaboration moderately than direct competitors – all whereas satisfying ever-evolving buyer demand at a aggressive value. This in the end implies that UBI merchandise ought to be seen as a complementary add-on, moderately than an outright alternative to the prevailing annual mannequin, which nonetheless has an necessary function to play.
In fact, it’s a two-way avenue and InsurTechs also can profit considerably from collaborating with the massive insurers. By partnering with a widened portfolio of well-established underwriting companions, InsurTechs are capable of increase their protection choices and acceptance standards, whereas guaranteeing that they provide their clients a complete alternative of essentially the most competitively-priced insurance policies available in the market.
Partnerships increase outwards
Collaboration inside the insurance coverage house is paramount to future success, however the trade ought to be cautious to not insulate itself from new alternatives that attain additional and add larger worth to the end-user. For instance, enhancing an current motor coverage providing by partnering with a restoration service supplier so as to add breakdown cowl as an possibility for added peace-of-mind.
An alternative choice is for InsurTechs to associate with automotive retailers to offer non permanent driveaway insurance coverage insurance policies as a part of the acquisition expertise. This permits dealerships to supply clients a fixed-price insurance coverage answer that’s extra clear and user-friendly, thereby making a extra optimistic expertise of getting a newly-purchased automotive insured.
Larger pricing transparency
The long-awaited twin pricing ban can be formally enforced by the Monetary Conduct Authority (FCA) in the beginning of 2022. The primary profit right here is that clients will obtain fairer and extra equitable pricing based mostly on their danger profile, not on whether or not they’re a brand new buyer or not.
Though the potential short-term implication may very well be a rise in new coverage costs, the longer-term profit can be extra clear pricing that isn’t punitive in direction of long-standing policyholders. It could even lay the foundations for a future the place insurers can reward loyal clients with extra aggressive charges – inside the context of their danger profile.
Fraud stays a priority
Whereas the trade is working arduous to make insurance coverage insurance policies shortly and simply accessible at a aggressive fee, this has led to an increase in bogus on-line automotive insurance coverage offers, referred to as ‘ghost broking’. The truth is, the Insurance coverage Fraud Bureau (IFB) obtained over 21,000 experiences of fraudulent motor insurance coverage insurance policies prior to now 12 months which may very well be linked to ghost broking .
In accordance with the IFB, its proportion of investigations into ghost broking have doubled lately, warning that tens of hundreds of motorists might unwittingly be driving with fraudulent cowl and can face critical penalties if caught by the police.
We will solely rid our trade of the scourge of predatory fraudsters by working collectively to coach potential clients on the perils of unrealistically low cost insurance policies via clear product guides, a clear quote and purchase course of, and an easily-digestible coverage phrases and situations.
Buyer fraud is one other main risk that shouldn’t be neglected. Insurers should additionally do all they’ll to fight shopper fraud utilizing the newest real-time knowledge out there to them, in any other case they run the danger of implementing inefficient pricing fashions that negatively affect trustworthy clients who might already be feeling the preliminary pinch from the twin pricing ban when choosing a brand new coverage.
Buyer expertise will play an more and more necessary function
Insurance coverage is a really complicated trade and though value competitiveness is a necessary facet, it’s certainly not the be all and finish all, particularly with the twin pricing ban coming into impact. With that in thoughts, ease of doing enterprise is changing into more and more necessary.
Precedence will have to be positioned on giving clients a larger understanding of what they’re (and maybe extra importantly, will not be) coated for via product transparency, simplified coverage language and an enhanced consumer journey. This may dramatically simplify the method of how insurance coverage is bought and consumed in 2022 and nicely past.