The insurance industry has long been under a black cloud of mistrust. However, innovative tech startups are driving much-needed transformation and disrupting the market for established players.

Insurance providers have struggled to address the long-standing issues concerning trust and customer satisfaction. And arguably, they have remained unscathed for years as customers have had little option but to persevere with poor levels of service and price hikes.

Innovations in technology are transforming how we live and how we do business, and the insurance market is no exception. So, how can traditional providers and startups alike leverage technology to rebuild trust with their customers and faith in their services?

The lack of trust in insurance providers

There are several reasons why policyholders lack trust in their providers. Let’s take a look at Saga as an example; earlier this year the flagship British brand was in the spotlight for ‘fleecing’ loyal customers. However, Saga is typically a trusted provider to the elder and most vulnerable consumers.

Moreover, insurance providers come second only to estate agents as the industry that is least likely to give you the best price first time around. With price often being the sticking point for customers, many turn to comparison sites to shop for a more affordable quote – only to find their existing provider is offering new customers a better deal than them!

Putting price aside, consumers also lack trust in the level of cover provided and the claims process. Many believe that providers try their utmost to avoid making payouts.

What’s more, there tends to be a lack of communication between customer and provider. Unless a policyholder makes a claim, providers will typically reach out only once per year at the time of renewal. The absence of consumer touch points further alienates customers and fails to instil loyalty.

Insurtech startups: Shaking things up

While established players battle with their legacy systems, insurance startups are using innovations in technology to solve customer pain points. Armed with customer data, user-friendly apps and a fresh perspective, new market entrants are certainly shaking things up.

For example, most traditional insurers aim to pay out a claim within 30 days, whereas insurtechs are delivering instant payouts via mobile apps. This gives customers peace of mind and goes some way toward rebuilding trust in the industry.

Consumers are usually confused by poorly structured policy documents, however insurtechs provide straightforward, easy-to-read policies that can be reviewed and accepted from a smartphone in just a few clicks.

Long-established providers have little to no communication with their customers, whereas startups are leveraging customer data to offer personalised product recommendations, give helpful reminders and say happy birthday!

Brolly, a full-service insurance broker, makes managing insurance policies easy. The startup has launched a user-friendly mobile app that consolidates all insurance policies into one place. They also use artificial intelligence to scan customers’ emails and make product recommendations. For example, if their technology identifies emails relating to a flight booking, they’ll find suitable travel insurance quotes to recommend based on your trip. The same technology also scans emails to find policy documents and seamlessly pulls through key information into a simple dashboard that’s easy to access with a smartphone.

In broad terms, startups are simplifying the customer experience, making it fair, seamless and transparent. Many established players, including Aviva, have recognised the need to react quickly in a bid to retain market share. However, transforming operations of a large multinational corporation comes with many challenges, most of which startups do not face.

Aviva: Leveraging technology to promote customer loyalty

Tom Daniell, Aviva’s UK Retail and Brand Marketing Director, believes that comparison sites condition customers not to trust insurers and to permanently shop around, focusing just on price. In a bid to hit back and steer conversation away from price, the insurance giant launched AvivaPlus.

AvivaPlus allows customers to pay monthly at no extra charge and doesn’t charge a fee for cancelling or changing a policy. And they’re bucking the trend by promising to offer renewing customers the same deal as new customers.

Aviva has also opened what is calls a ‘Digital Garage’ in Shoreditch where they employ Data Scientists, Customer Analytics Specialists and former Gaming Developers. The team aims to leverage data and technology to understand their customers, identify problems and provide solutions. One of the first products they launched was the MyAviva dashboard as ‘the simple way to view and manage your insurance, savings and investment policies in one place, whether you’re at home or on the go.’

Aviva is yet to address the issue of price hiking, although they say it is on their agenda and believe it will boost customer retention.

Smartdriverclub: Using telematics data to reduce premiums

Smartdriverclub, a client of ours, is fairly new to the insurance market. They use black box technology to monitor driver behaviour and provide personalized quotes based on an individual’s driving style. Their ethos is to ensure good drivers do not bear the cost of careless ones. As a result, they provide a discount of up to 40% at the time of renewal dependent on driver performance.

Their black box, called a Smartplug™, uses GPS technology to locate and retrieve a vehicle if stolen, or simply if you cannot remember where you parked. It is also used to provide crash assistance as the insurer is notified of accidents in real time, which gives customers confidence and peace of mind.

What’s more, policyholders can download the mobile app to receive notifications of key dates like MOT and tax, to record business miles with ease and to download an expenses form. These features are ideal for busy, modern lifestyles and help to create a seamless customer experience.

Smartdriverclub’s approach is not only personalised, but it also allows for regular and useful interactions that help to build positive customer relationships. If customers feel valued and accommodated, they are more likely to consider renewing their policy.

Read about the work we do for Smartdriverclub and how we helped increase their click to sale by 14%.

Other use cases: Technology in insurance

Here are some other ways that insurance providers are leveraging new technologies:

• Insurance companies are investing large amounts of money in artificial intelligence to drive product innovation, optimize processes and enhance the customer experience.
• Health and life insurance providers are exploring the use of wearable technology. They are using biometric sensors to access accurate data in real-time about the status of a patient’s physical health. This revolutionary technology will undoubtedly bring countless benefits to the industry. It was also change how life insurance policies are underwritten.
• Some insurers are also using natural language processing (NLP) to automate repetitive tasks, increase efficiency and reduce costs. NLP allows insurers to create chatbots that can respond to customer enquiries, onboard new customers and process simple claims.

A long way to go

The insurtech market is still relatively new when compared with other emerging industries like fintech. As such, insurers are yet to realise the full potential and capabilities of using new technology.

Ironically, technology is humanising transactions and customer service by taking away mundane tasks and providing customers with another way to engage. Smartphones and mobile apps are vital for transforming the industry and empower both insurance providers and consumers. They facilitate ease of communication and allow providers to offer products and services seamlessly, encourage enhanced engagement and promote brand loyalty.

The primary goal for many established providers is to retain customers while startups are focused on acquiring. However, for both, building trust and loyalty is key. There is a lot of work to be done to change long-held consumer perceptions and trust will be earned over time.