Using Emerging Technologies in Personal Lines Insurance
New technologies disrupting the insurance game
EDGE100 Report, 2022
Whether it’s worldwide shifts in ecommerce, housing, or health, insurance is sure to follow—everything needs a contingency plan. With the changes, the insurance ecosystem, too, evolves, and new or neo insurers are rising to fill in with fresh business models using emerging technologies—more specifically known as insurtech. It’s possibly time for bigger players to explore and watch this space more closely.
The recently-released EDGE100 report, which spotlighted 100 startups with high growth potential in emerging industries, featured two neo insurance startups. Before we dive into the player’s profiles, let’s take a quick look at neo insurance and the tech (insurtech) it leverages.
What is neo insurance?
Neo insurance is one term used to mean novel insurance models that use new technologies and focus heavily on customer experience by providing personalized products via digital channels. They tend to reflect an individual’s circumstances better as well as allow for instant coverage and feature faster claim processing. Their main aim is to address and overcome the pain points of traditional insurance, where policies are offered based on a one-size-fits-all approach.
Alongside, there are Insurance technology (insurtech) solutions that have largely enabled neo insurance to materialize. Insurtech typically uses technologies such as Internet of Things (IoT) devices, AI, and machine learning to automate insurance functions and gather data in real-time, which can lead to more accurate pricing and faster claims processing.
The demand for Insurtech products is high; on the one hand, pulled by the demand from consumers—their expectations for more personalized policies. Additionally, it offers cost savings for insurers, by digitizing insurance functions. Likewise, traditional insurers coverage can be inadequate, especially for non-conventional industries, such as ridesharing. All factors combine to create new opportunities for neo insurers.
5 ways neo insurance is redefining the insurance ecosystem
- Tackling automobile needs—the emerging trend in this segment is usage-based insurance (UBI), these policies are replacing traditional automobile insurance with a pricing mechanism that is more reflective of the customer’s driving patterns. For instance, companies like Root Insurance, Metromile.
- Easing homeowners & renters insurance—these companies provide digital homeowners & renters insurance via online channels using technology such as satellite imagery and weather data to automate the underwriting process and validate claims. Additionally, some companies also use smart home technologies such as smoke detectors and water leak sensors to monitor risk. Lemonade, Hippo Insurance, Kin Insurance
- Life coverage needs—these insurers use a combination of AI and big data to automate underwriting decisions. In most cases, policies are issued without needing traditional approaches such as medical exams. Ethos Ladder, Bestow
- In building up the neo insurance offerings are turnkey solutions companies that provide an end-to-end, white-label product suite to enable setting up neo insurance products. Cambridge Mobile Telematics, Sure, Trov
- Targeting a specific process in the value chain, some companies provide solutions for insurers and reinsurers such as data analytics to support pricing and underwriting, messaging solutions for customer engagement, and fraud detection mechanisms for claims processing. Shift Technology, Tractable, Snapsheet
A brief look at two notable disruptors
Getsafe is a German digital insurance company that provides vehicles, renters, liability, content, and other types of personal insurance. Right now, Getsafe operates in Germany and the UK and offers its insurance through a mobile app and an AI-powered chatbot called “Carla”, including personalized insurance recommendations through the app!
By October last year, it served 225,000 customers in Germany and 25,000 customers in the UK. In the same year, the company got a European insurance license from BaFin, Germany’s financial regulator, and it hopes to expand into new European markets such as France, Spain, Italy, and Austria through this method.
By Miles is a pay-per-mile insurance provider based in the UK that provides a tracker which plugs into the car to log miles driven, or, alternatively, uses built-in telematics on newer vehicles to track distance. Its CEO and Co-founder was a managing director for one of the business units at Goldman Sachs, while the CTO and Co-founder have been senior developers at major financial services companies such as Deutsche Bank and Goldman Sachs.
Vehicle tracking, troubleshooting, accident detection, and a 24-hour claims line are its value-added services. By January 2021, By Miles had served more than 25,000 customers, and it expanded its foothold—entered Italy in March this year, and has broader plans to expand in Europe by 2023. It has partnerships with Ford to offer UBI, with data sharing.
Changing personal needs means sophisticated, or sometimes sensitive, solutions are required to create smoother customer experiences, address underserved markets, and minimize risks to insurers.
Essentially, there are pull factors for neo insurers to meet new and unmet consumer needs and push factors like emerging technology that synthesize well to bring new solutions into action.
Neo insurance is growing because it seeps into these sometimes gaping and other times granular spaces— something as vast as underserved agricultural communities with climate risk cover, and something as specific as automating a claims process.
This isn’t to say neo insurance is fool-proof and without risk, but established insurers should follow the space closely, and watch its evolution to use new tools to better solve traditional issues or new needs.
Book a demo with our team to learn more about the neo insurance industry and the tech it leverages.