InsurTech is set to disrupt one of the oldest industries there is. These companies are making use of artificial intelligence (AI) and big data to create palpable value for their customers. What value do these digital start-ups bring and why do we feel that TV advertising is well placed to help these start-ups compete?
Price is by far the most dominant factor that influences buying behaviour in the insurance industry and here InsurTech companies have a major advantage. They can leverage their asset-light and cutting-edge business to achieve significant price reductions in two ways. First, they make use their digital customer data and employ big data analytics to reduce the cost of claims and optimise pricing. Second, digital processes substitute for labour and minimise processing times which further drive down fixed costs.
In addition to cost savings, InsurTech companies are also well-placed to meet today’s customer service expectations. Nowadays customers want tailored services, 24-hour access, mobile handling of claims, clear product and pricing information, and more. Only data-driven and fully digital insurances meet these expectations. The insurance incumbents will take a long time to become fully digital, if they ever manage this transformation at all.
However, there is a major challenge that newcomers in the industry face. Insurance is a highly regulated market and Insurtech start-ups all offer broadly the same fundamental services. Customers have a hard time differentiating between the seemingly similar services offered by these companies. And when it comes to serious matters, like insurance, people don’t jump for an unfamiliar brand. The challenge for the newcomers therefore is to build their own strong brand and distinguish themselves from the other digital companies in the eye of the customer. A large TV presence achieves exactly that. Consumers familiarise themselves with the company. They start to build trust. TV advertisement conveys the message of a functioning, mature, and reliable organisation. This is enough to persuade many potential customers to switch. And once there is a sizable customer base, word of mouth about good customer service and frictionless in-app experiences spreads. More and more people will take the step to switch their insurance providers, which will close the gap from early adopters to the early majority.
At this point we predict InsurTech companies will reach their full potential, overtaking the incumbents in both price and service.