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What Can Insurance Giants Learn From Insurance Start-Ups?

by Precise Leads

March 3, 2017

Although guerilla insurance tactics tend to be labeled “disruptive,” larger carriers should take the hint and begin to go with the flow.

As traditional insurers adapt to the digital age, many are struggling to keep pace with new insurance start-ups that champion alternative practices and policies — and, accordingly, attract new clients to their products.

By comparison, these newer companies are more nimble. After assessing what policyholders do and don’t like about big-name carriers, startups like Oscar and Lemonade have been hard at work developing products to answer the changing demands of contemporary consumers. While this disruptive and transformative approach obviously benefits the startups themselves, there’s no reason why larger insurers can’t take a leaf from their book.

Use Technology to Build Relationships

One of the most important lessons that can be gleaned from the success of Silicon-Valley-inspired ventures is to leverage technology to engage prospects and policyholders. Although you might first think of fancy gadgets when you imagine insurance technology, many of the most cost-effective tech strategies involve tools that you already have on your phone.

For instance, most of these startups have significant social media presences, which helps them to meet prospects where they already are. When it comes to 21st-century sales, interaction is king: prospects want to know that their needs are your top priority, and maximizing interactions through social media is one of the simplest first steps toward building an engaging insurance brand.

This holds true for customer service as well. Some larger carriers have already developed mobile apps and specialized online portals which facilitate real-time information exchange and accessibility — and USAA even has “virtual agents” which can answer common questions via online chat.

Ultimately, the lesson to be learned here is that all digital materials related to your brand must be optimized for client interaction. It’s crucial to experiment with outreach methods in order to be able to discern which approach merits future investment. If you make the effort to reach out to your clients and prospects first, it’s likely that you’ll be repaid in kind.

Simpler Product Offerings

It might seem obvious at first, but because the layperson understands very little about insurance, startups have seen success by vastly simplifying the process of filing a claim.

Insurtech startup Lemonade allows its policyholders to instantly file claims from their phone, which seems to complement the millennial tendency to live and breathe iPhone apps. While most claims are processed near-automatically, Lemonade also asks its policyholders to record a short video of themselves explaining the incident — potentially uncomfortable for the claimant, but definitely aligned with contemporary trends.

Other startups are leveraging mobile technology to fundamentally change the way that premiums are calculated. Auto insurance provider Metromile uses telematics to determine premium rates for its policyholders. A monthly flat fee is typically $35, and there’s a small charge for each mile driven during that month. Because these policies are favorable for urban dwellers who don’t drive long distances each day, Metromile has already seen some pretty significant success, and is now licensed to operate in all 50 U.S. states.

This activity-tracking tech trend has also cropped up in the health insurance market. Oscar, for instance, has partnered with wearable technology producer Misfit in order to reward clients for healthy behavior. Clients are given a daily goal of steps to walk, and if they meet it, they earn $1 towards an Amazon gift card — talk about gamification!

At the end of the day, these new technologies don’t just procure data that can guide your decision-making: technology is pushing the insurance industry in the direction of constantly analyzing and striving to meet changing consumer preferences. By offering personalized and user-focused insurance experiences, startups and insurance giants alike have been able to enhance relationships with clients and offer significantly improved products.

New technological advancements don’t necessarily have to spell out the end for traditional insurance providers. On the contrary, if the ethos of tech-savvy insurance start-ups is “disrupt and reinvent,” then larger firms must “adapt and thrive.”

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