InsureTech Join’s Caribou Honig explains how insurtech is upending the client expertise; how information is enabling new dangers, companies and working fashions—and why insurers ought to aspire to be dentists, not toothbrushes.
Caribou suggests that carriers needs to be extra like dentists than toothbrushes—that’s, specializing in making the client relationship as painless as attainable, slightly than attempting to architect extra alternatives for engagement.
Channel partnerships that bundle insurance coverage with different purchases—corresponding to journey insurance coverage with buy of a aircraft ticket—could be a good play to enhance the buyer expertise.
Digital-first insurance coverage distribution could allow uninsured or underinsured populations to “break via” actuarial tables. For instance, telematics could assist a great driver in a high-risk demographic exhibit how safely they drive.
Vanguards of insurance coverage
Welcome again to season two of the Accenture Insurance coverage Influencers podcast. This season, we’ve spoken to Scott Walchek about how micropivots have contributed to Trov’s success, and Ruth Foxe Blader about why Anthemis invests in monetary merchandise for a digital future.
Traits in insurance coverage, with Caribou Honig
In our first interview with Caribou Honig, we checked out the present state of insurtech and what to anticipate at InsureTech Join 2019. On this episode, we dig into at the moment’s insurtech developments, separate actuality from hype and focus on the social implications of digital-first insurance coverage merchandise.
The next transcript has been edited for size and readability.
Welcome again to the Accenture Insurance coverage Influencers podcast, the place we have a look at how the trade’s vanguards aren’t simply adapting to vary, however making a dynamic future for themselves. I’m your host, Eagranie Yuh, and at the moment my visitor is Caribou Honig.
Welcome to the podcast, Caribou.
Thanks, very glad to be right here.
Traditionally, insurers haven’t engaged that a lot with their clients past level of sale and declare, if one thing occurs. And it looks as if loads of gamers are attempting to vary that. I perceive that you’ve got a unique view of issues, which you clarify by way of dentists and toothbrushes. Are you able to share this with our listeners?
Yeah, certain. That is most likely the most effective metaphor I’ve provide you with within the final couple of years, possibly my entire profession.
I feel there’s somewhat little bit of financial institution envy for insurance coverage firms. They see this degree of engagement with the banking product that appears lots like a toothbrush. You employ it twice a day. When I get up, I examine my bank card stability, and simply earlier than I fall asleep, I examine my checking account to be sure that I don’t have any overdrafts. Okay… good. I can sleep nicely tonight. It begins over the subsequent morning. And that could be a very excessive degree of engagement, for causes that I feel are fairly intuitive.
You see loads of insurance coverage firms––and start-ups as nicely––asking: Can we change into like that toothbrush? In any case, if the banks can, we will too, proper? And it’s not clear to me that that’s the suitable aspiration. It could really be that the suitable manner for insurance coverage, as a product and as an trade, is far more just like the dentist go to.
Dentist visits are very invaluable, however very completely different out of your day by day use of the toothbrush. You go in as soon as each six months, you sit within the chair. It is probably not all that snug for an hour, however you get executed what’s executed, you hope there’s no cavities. And then you definately set your appointment for six months later.
It’s relatively low engagement, barely uncomfortable, nevertheless it will get the job executed. And it could be that that’s really far more the suitable mannequin for insurance coverage, that “Yeah, you go do a fast checkup, ensure you’re lined appropriately, hope you don’t have any cavities—I imply claims.” And set an appointment to examine once more in six months after which pay your invoice. That’s advantageous.
It’s not as satisfying because the notion of the high-engagement toothbrush, however possibly the true reply is that the trade ought to aspire to be an incredible dentist go to, slightly than a toothbrush.
Now, I’ll say the exception to that—if there’s going to be a toothbrush mannequin for insurance coverage, my intuition is it’s going to come back out of the Web of Issues sort of methods. Take into consideration the Apple Look ahead to monitoring your well being for each life and medical insurance. Or a water monitor embedded within the pipes in your own home. Each night time it sends you somewhat message: “your pipes are advantageous.” That truly appears related.
It could really be the good toothbrush, mockingly sufficient, that proves to be an instance of insurance coverage really being extra like a toothbrush. Tright here’s no less than one start-up I do know that gives a wise toothbrush as a part of their dental insurance coverage bundle. That’s taking it actually, however I assume that will work.
I’ve heard others say one thing comparable. For instance, telematics could be very standard proper now and insurers find it irresistible since you get all this information, you may personalize the premiums, you may higher perceive your buyer.
However on the similar time, I’ve additionally heard loads of clients say, “I don’t need my insurer telling me easy methods to drive. I don’t need them to say, ‘hey you shouldn’t be braking so onerous.’” It looks like an imposition, and so I’m wondering how broadly that applies to this toothbrush method.
Do folks actually need their insurer to be concerned of their lives, or as you say, is there some stability between the toothbrush and the dentist?
I feel that’s proper. That’s precisely proper.
So let’s observe this argument to the subsequent degree. If insurers needs to be wanting extra at the dentist expertise, what’s an insurer—our analogy is getting a bit muddy now—must do to be a extremely good…dentist?
What makes for a great dentist? One is that they’re thorough. One other is that they attempt to decrease the discomfort alongside the best way. And once they do discover a cavity, they struggle that can assist you navigate your choices and care for it shortly.
You name up your dentist and say, “I’ve acquired a toothache, actually dangerous toothache.” You don’t wish to hear your dentist say, “Properly, let me ship somebody over to try it in every week and a half and so they’ll take a couple of photos of it after which we’ll get round one other week or so to determine how we wish to take care of it.” (And I’m attempting, after all, to create a barely absurd toothache adjustment course of there to essentially kill our metaphor.) You need the dentist to say, “Sorry that your tooth is hurting so dangerous. We’ll discover a technique to work you in at the moment. Come on in.”
Or—I’m going to go actually off the rails right here—possibly what the dentist ought to say is, “You’ve acquired a digital camera in your hand proper now, attempt to take a few photos of it for me. Text it over to me and I may give you, within the subsequent 5 minutes, a fast perspective about whether or not that is one thing that must be seen at the moment, or whether or not to get you one thing for the ache however it may be handled in three days.” That’s the broader theme I like, round beginning to outsource among the exercise in a self-service technique to buyers themselves.
And also you’re beginning to see this, possibly not a lot in precise dentistry, however you might be beginning to see this in elements of insurance coverage, particularly across the claims course of or the information entry course of. The Web is nice at enabling firms to supply among the work wanted for the product or the applying or the declare, to truly go to the patron. However in a manner which really makes the patron happier, as a result of they will do it extra on their phrases, on their timeline. You already know, I feel that’s fairly attention-grabbing and I feel that’s the place the world goes right here.
One factor that strikes me in the description of our insurer/dentist, is that there’s this elevated deal with the client expertise. I feel loads of these insurtechs actually have the client expertise on the core of their providing, and see that as one thing that’s much less distinguished with the standard insurance coverage expertise.
Why is buyer expertise so vital and why is it such a central function of the insurtech world?
I consider two primary areas for it. One is the claims course of, and the opposite is the positive choice and worth proposition side of the client expertise.
First, the claims course of. Wright here does buyer churn come from? I feel it largely comes from the declare facet. (I suppose the opposite place it additionally comes from is the, “Hey, it can save you 15 % in 15 minutes,” so there’s a pricing factor.) However I feel loads of buyer churn finally ends up being the results of dissatisfaction with the claims course of—the claims expertise. So occupied with easy methods to make that claims expertise honest, clear and simple for the patron ought to reap actual dividends by way of decrease churn. And there may be actually the instance that we appear to maintain coming again to: the 15-second claims expertise.
This is among the issues I really like about parametric insurance coverage fashions: you may construction it so there isn’t a such factor as a claims adjuster or a dispute, or claims decision. The threshold is triggered by, “Oh, you could have a drought as measured by the climate satellites on this acre. Due to this fact, three days later, you’re going to see this cash because the parametric crop insurance coverage in your checking account.” There’s no claims expertise different than receiving cash in your checking account. I feel that’s a reasonably good claims experience. I actually suppose that specializing in the claims buyer expertise—structurally, not simply the handholding side of it—has energy for buyer retention.
The opposite space is should you consider the client expertise wrapped into product design. Not simply occupied with what coloration palette you select to your cellular app, however the worth proposition. What’s the product you’re providing and the way are you structuring the trade of worth?
I take into consideration Well being IQ as an attention-grabbing instance. They’re the oldsters who observe me across the Web exhibiting me the advertisements: “For those who can run a six-minute mile,” which I can’t, by the best way, “then we’re the life insurance coverage firm for you.” That’s a buyer expertise wrapped far more within the depth of the worth proposition than the colour palette. And that’s one which I feel is clearly pointed at driving constructive choice and avoiding adversarial choice.
I feel rolling the client expertise into channel partnerships is one other instance, proper? I’m seeing loads of exercise the place start-ups, in particular, are constructing out some novel product after which embedding it into the suitable level of another person’s buyer expertise.
Take into consideration journey insurance coverage; this has been round for some time. You’re shopping for your ticket on Expedia and that’s the second when an insurance coverage firm will give you, in partnership with the channel companion Expedia, the insurance coverage product. That’s really very good occupied with the client expertise.
One argument that I’ve heard from the incumbent facet is that bundling—such because the Expedia and journey insurance coverage partnership—can be a extremely good buyer expertise play. I feel there’s a worry on the incumbent facet that it renders the insurer invisible. You see insurance coverage getting bundled with luxurious automobile purchases, or automobile sharing and these sorts of issues. I feel there’s a worry that insurance coverage begins to change into invisible, thus exacerbating this buyer expertise downside. Does that make sense?
It does, however I feel it comes right down to a query of, “the place is your supply of structural benefit?” In case your supply of structural benefit as an insurer is your model—model awareness and the like—then that’s an enormous downside on this context. This shift is a risk to that form of aggressive benefit.
Alternatively, in case your aggressive benefit is, as an illustration, “we now have the most effective know-how stack and APIs for seamlessly integrating our product into channel partnerships,” then a world that strikes to that embedded insurance coverage mannequin really favors that insurance coverage supplier, as a result of by definition they’ve a bonus in that integration. I feel it could reduce each methods.
An analogous functionality that cuts each methods is information. So I feel that incumbents get pleasure from tons of historic information, of actually good understanding of historic danger, and we’re arising to some extent the place possibly that’s not enough, or there are alternative ways of doing it (for instance, dynamic pricing primarily based on Web of Issues information). Can you speak about how information is enabling this subsequent technology of insurance coverage know-how?
Once more, I feel in some methods it comes right down to the declares facet. Claims is the place information is coming in most simply, most readily. And I feel that it’s an easier setting there, particularly in contrast to underwriting.
You referenced telematics earlier—it’s actually onerous really. It’s a protracted course of to include telematics information into automotive underwriting. Not that there isn’t worth in it, nevertheless it’s a unique regulatory regime you’ve acquired to handle. Chances are you’ll must rebuild a complete bunch of fashions to be able to incorporate it into underwriting, invite some regulatory scrutiny. It could not really be culturally aligned with any kind of conventional actuarial science. There’s, in apply, a distinction between actuarial science and information science, even when there shouldn’t be.
However should you carry some information to search for fraud within the claims facet, it’s only a lot simpler. You’ll be able to wager the educational cycle is far faster to show or disprove that some set of information is definitely incremental. I feel that the regulatory hurdles are lots much less on bringing new information or new information methodologies while you’re wanting on the claims a part of the method.
Can we discuss briefly about blockchain? It looks as if it’s both the subsequent Web…or fully not the subsequent Web. What are you seeing?
I feel blockchain is a really attention-grabbing form of know-how. It’s attention-grabbing partially as a result of ledgers are in every single place; ledgers are very commonplace, and so any new, actually distinctive know-how for sustaining a ledger is attention-grabbing. There are distributed ledgers of different issues. People use Google Docs on a regular basis.
I’ve acquired a magnet on my refrigerator and it’s really a shared ledger. It’s referred to as the grocery listing for the Honig household. If you wish to add one thing, you add to it. And if you wish to cross one thing out, you may cross it out. It’s not distributed. It’s centralized, on one fridge.
There are some advantages of blockchain. However I don’t suppose it’s as magical because the picture among the advocates wish to create. It’s merely acquired completely different tradeoffs than different forms of applied sciences for sustaining a ledger.
After I suppose about, “OK, when would a distributed ledger be the suitable reply, when would blockchain be the most effective?” I take into consideration two standards, which each should be true. If they’re each true then blockchain is admittedly, actually attention-grabbing:
You have a number of events sustaining their very own ledgers of some widespread data.
These companions periodically spend time reconciling their distinct ledgers of that data.
So should you’ve acquired 10 completely different events, all recording the identical primary data on their very own firm ledgers and so they have to come back collectively as soon as 1 / 4 and spend weeks attempting to reconcile them, then that’s an incredible place to look into having some kind of (most likely non-public) distributed ledger, some kind of blockchain.
Alternatively, should you’ve acquired 10 firms which might be sustaining their very own ledger, however they by no means really feel like they’ve to come back collectively and reconcile it, then I don’t know why some kind of distributed model of that ledger is best than a centralized method such as you’re doing at the moment.
So I simply suppose it wants an actual framework method to grasp when it’s higher and when it’s not nearly as good. What are the tradeoffs? What are the professionals and cons, in comparison with sustaining a sticky observe on the fridge or a Google Doc or an Oracle database?
Attention-grabbing. One other theme that comes up in InsureTech Join is that this reminder of the human facet of insurance coverage. I can’t keep in mind your actual wording, nevertheless it was principally, “it’s a know-how convention, however on the finish of the day insurance coverage has an impact on folks.” And I’m curious why you are feeling compelled to say that.
I really feel compelled to say it as a result of it’s so straightforward at an trade convention—and notably one that’s centered on what’s coming and know-how and innovation—to lose sight of the large image, to lose sight of the why that goes past simply the egocentric financial a part of the why.
Look, I spent practically a decade at Capital One, in an trade that ought to exist. Bank cards are literally fairly helpful and rising entry to credit score is kind of helpful. Capital One does that. However like 1 / 4 pounder or the Whopper (whichever comes from McDonald’s), there will be an excessive amount of of a great factor. So you get phrases like “drowning in debt” or “being as much as my eyeballs in debt” or “being on a debt treadmill.” I assume over time there, I got here to get somewhat bit extra private maturity, occupied with the implications of these issues.
One of many issues I like in regards to the insurance coverage trade and attending to play my little function in it, is that you simply don’t have folks speaking about, “I’m as much as my eyeballs in insurance coverage” or “I’m on some kind of insurance coverage treadmill; I simply can’t get off.” If something, it’s far more, “How will we get extra folks to get the extent of safety that’s in their very own self-interest?”
There’s additionally, again on the declare facet, making certain that claims are being adjudicated pretty and successfully for folks on all sides. So that you do get an adversarial side of that between the client and the insurance coverage firm.
However insurance coverage is definitely a extremely invaluable factor and for all of the nerdy pleasure I get about APIs, and transferring insurance coverage to the cloud and blah blah blah, I additionally get an actual private satisfaction, and I feel everybody concerned ought to get an actual private satisfaction over the nice that this trade does for folks.
After I was getting ready for our dialog I requested a coworker of mine who has attended ITC (as a result of I’ve not) and that was one among her statements: that as a lot because it was a tech convention, she was shocked—happily shocked—to see loads of dialogue of how these new merchandise had been serving to get insurance coverage to individuals who had been un– or underinsured, and how there was fairly a human drive to loads of these firms.
Quite a lot of know-how innovation, loads of “traditional” Silicon Valley is round product innovation and design. And while you’re doing good design work and good product improvement work, you really must have the human entrance and middle of your thoughts.
I prefer to say you wish to be constructing for a spotlight group of 1, and simply ensure you’re serving that one ridiculously nicely. And then you definately hope that there’s different folks like that one individual you’re attempting to serve––however actually ensure you’re serving some wants of some individual. The extra you may really title them, the higher—not abstractly, however “Oh yeah, this individual I do know would get worth from this product or from this design.”
There’s an attention-grabbing submit on the Atlassian weblog speaking about moral design and among the unintended penalties of one thing which will begin off as pretty benign, or as one thing that goals to do social good.
So I wished to speak somewhat bit about a few of these implications, notably as a result of it’s insurance coverage. Can we run a danger if all these firms are creating digital-first merchandise? Does that, maybe, favor a extra privileged buyer? And should you take that to an nearly (hopefully) absurd consequence, do you find yourself with this bifurcation of higher-risk people who find themselves not in a position to make this alternative between a conventional product and a more recent product, and these most well-liked dangers, who by advantage of their privilege, have been in a position to decide on one thing that gives them a greater expertise and a greater product?
Is that a chance and is there a accountability of insurtech as a complete to make it possible for doesn’t occur?
Properly that’s a small and simple query to reply… I could also be barely geared up in that I used to be a philosophy minor in school, we would depend on that somewhat bit. I attempt to give somewhat thought to those sorts of issues.
However look, I’m no professional in ethics. Not by a protracted shot. Instruments are simply that, they’re instruments. And the way they get used is the consequence of many, many alternative stakeholders and events and entities in our society. Which is to say as a backdrop, the vary of outcomes could be very huge and the vary of events could be very huge as nicely.
Now when I attempt to take this to the query of social implications of insurtech, I discover it helpful to separate that between the underwriting facet and the advertising facet.
I really discover the underwriting facet to be somewhat simpler to get my head round. I feel as a society we are saying that we’re not going to cost, or make obtainable, a product primarily based on one thing you can’t change about your self. So what falls simply below that, as an illustration, is ethnicity. Gender is one other one.
Genetic elements are one other instance. I can’t actually change my genetics. Now that we will learn a human genome for a lot cheaper than we may 5 years in the past, you continue to can’t use it for employer-based medical insurance.
We additionally add, there’s some issues which you possibly can change about your self, however which you need to by no means must. Assume faith.
As a basic precept, these issues which you’ll be able to’t or shouldn’t have to vary about your self, we’re not going to underwrite on. However these issues that are your selections, that are behavioral—like do you slam on the brakes onerous, or do you smoke, or do you are taking your diabetes medicines—we’re far more prepared to cost in opposition to.
Now there’s exceptions to those issues. Within the US, as I perceive it, we nonetheless enable, on the federal degree, for genetics for use for all times insurance coverage underwriting. And we make a distinction of, okay, nicely there are some locations the place it’s extra pernicious, and different locations the place it’s extra acceptable.
Gender is definitely a extremely attention-grabbing one. Developed economies have come to completely different conclusions about when and the place gender can be utilized for underwriting of auto insurance coverage. In Europe it’s prohibited, level clean. I imagine most states—not all—within the US it’s permitted. And that’s a extremely attention-grabbing set of social coverage selections. On the one hand, we just like the notion of gender neutrality. On the opposite hand, while you implement gender neutrality for auto insurance coverage, it implies that in apply, loads of girls are going to be subsidizing the insurance coverage premiums of males, on common.
I like telematics as a result of it permits underwriting primarily based on one thing that’s behavioral. For those who drive aggressively, in a manner that creates extra danger, you can begin to make selections to drive much less aggressively. And so I take into consideration the one that could also be really a really secure driver, however has demographics or different information, like credit score data, which places them right into a extra at-risk inhabitants. But by letting them show via telematics how safely they drive, they will break via the actuarial information tables. I feel that’s really very empowering for somebody.
The advertising facet is somewhat bit extra refined, and in some methods is somewhat bit cleaner for me. The benchmark can’t be absolute uniformity of availability, as a result of that’s form of a false benchmark. I consider the benchmark as “What’s the supply of it at the moment?” and “Is making insurance coverage obtainable via your smartphone going to enhance that for a shopper?”
I personally stay in a relatively economically poor space. It’s most likely a banking desert; I can’t say for certain that it’s an insurance coverage desert, however I think so. And I additionally imagine that penetration of smartphones—possibly not the most recent iPhone, however a wonderfully succesful smartphone—is fairly excessive in my neighborhood.
So I feel, and I hope, that the supply of digital-first insurance coverage distribution and insurance coverage merchandise will go a protracted technique to leveling the enjoying discipline. This can be a advanced, actual query.
I’m glad you’re extra of an optimist than I’m, Caribou. I feel that’s most likely why you had been the VC and…nicely, there are a selection of different the reason why I’m not the VC, however you’re undoubtedly extra optimistic than I’m. So thanks for that.
Properly, let’s revisit in 5 years and see who’s the higher report on that. We’ll see the way it goes.
Right this moment we’ve been talking with Caribou Honig, the chairman and co-founder of InsureTech Join. Thanks very a lot for taking the time to talk to me, Caribou.
It’s been an absolute pleasure.
The insurance coverage claims course of is a main candidate for reinvention, whether or not via enhancements to the claims expertise, offering extra self-service choices for patrons, or utilizing new and novel types of information.
Incumbent carriers ought to study their supply of structural benefit, particularly as embedded finance shifts the main focus away from model consciousness and towards buyer expertise and know-how capabilities.
Many insurtech merchandise have potential to offer insurance coverage to populations which might be presently uninsured or underinsured.
For extra steerage on self-driving automobiles:
In our subsequent episode, we’ll reconnect with Ruth Foxe Blader of Anthemis to speak about why scale is so integral for insurtechs proper now. And after that, we’ll come again to Caribou Honig to speak about how incumbents and insurtechs can foster a extra resilient and agile trade—collectively.
In the interim, you may meet up with earlier episodes of the podcast.
What to do subsequent:
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