InsurTechs Breaking Down Traditional Hierarchies

Insurance needs to become more user and vendor friendly

Nobody wants to buy insurance. There’s nothing fun about trawling through search engine results or entering personal details over and over again on a comparison site to find a provider. The experience is far from ideal for vendors, either. Insurers are forced to shell out for advertising on both search engines and comparison sites, jostling with hundreds of competitors. The bigger the name, the higher the listing, making it very difficult for InsurTech companies to even get a foot in the door.

Despite these fundamental challenges, the insurance market is changing – fast. $2.13bn was invested in global InsurTech companies in 2017 and is set to rise. Fuelled by investment and the recognition of bigger brands, InsurTech startups are gradually breaking down traditional power hierarchies.

D/SRUPTION spoke to James York, founder of Worry+Peace, to find out more.

The needle in the haystack

Finding the right insurance provider and product is a chore. The vast majority of online searches start with a search engine – the most popular, of course, is Google. Search engines make their money from adverts, so the more a brand pays for advertising, the more search results they will get. This means that of all of the insurance brands in existence, it will always be the big names that get the most traction. Another issue for insurers is that search engines have no brand loyalty. A user could search for insurance from a specific provider, but still end up scrolling through competing ads. Comparison sites also have critical setbacks – especially when it comes to live pricing.

“Live pricing is a poisoned chalice when it comes to connecting the whole sector because not everyone can do it. There are about 770 different types of insurers in the UK. Most comparison sites have around 70 of them live priced, so they only actually connect the buyer to 10 per cent of products in the market,” says York. “Sometimes the best insurer for a buyer may not even do live pricing. It doesn’t mean buyers shouldn’t be talking to them.”

Comparison sites and search engines are so powerful that the industry almost has to use them, but it’s clear that they aren’t optimised for users or vendors. With its experience focused search function, Worry+Peace offers a different approach.

“We’re creating a traffic source for insurance that connects the whole market,” explains York. “Everything we’ve done is to get to a place where our revenue is not made from customers buying something. Our job is to convince people to hate insurance less, and connect people to the best tools.”

Since March, Worry+Peace has attracted 76 providers with over 200 products. Brands enter a bidding auction to fill the top three slots in the InsurTech’s search results. All other results are randomised. Even when a big brand gives up a top spot, they are still shown in the results and don’t have to pay to back out. The goal, York says, is to create a network that gives insurers fair terms of business at the same time as providing users with an alternative to cluttered comparison sites and search engines.

Nurturing a network

Building networks is also one of the main objectives of InsurTech UK, a trade association cofounded by Worry+Peace. Set up in 2019, InsurTech UK aims to position the country as the most innovative market for insurance. It comprises 57 InsurTech startups and brands and seven associate members including the Chartered Insurance Institute, Lloyds of London, Hiscox, and AVIVA.

“People understand the term ‘FinTech’. It’s seen as disruptive but also trustworthy,” says York. “InsurTech doesn’t have that quite yet. One of the reasons we set up InsurTech UK is to start that brand equity for InsurTech.”

Trust and transparency

Creating trust is always a top priority for any business, particularly those in the financial sector. Currently, brands receive most of their traffic from comparison sites and search engines. Unfortunately for companies and customers, these platforms lack transparency and affect trust.

“On comparison sites, customers are asked to give personal information, but not all of the providers need answers to all of the questions. That means they have no way of finding out what information insurers actually need. Comparison sites don’t show who asks what questions, so it’s all hidden and not useful to the user,” says York.

Openness and transparency are equally important for insurers, as demonstrated by the example of Beat That Quote.

“Google once bought a comparison site called Beat That Quote and tried to put it in its top search results,” says York. “The advertisers said, ‘Wait a minute, so you decide who’s number one with a secret algorithm but don’t tell us how we can get better, and expect us to auction for top spots?’ The mere threat of losing the advertising revenue caused Google to shut down a comparison site that they spent £37m on.”

The opaque nature of search engines and comparison sites has led to discussions surrounding open insurance, which is another of InsurTech UK’s main focuses. It is also a global trend, with bodies like the Open Insurance Initiative drawing together InsurTechs from around the world to develop open APIs for the industry.

Changing the status quo

The UK is home to a host of innovative InsurTech businesses. The barriers to entry are considerable, including the fact that they need to work with underwriters. It can take time for InsurTech startups to convince underwriters to work with them, by which time they may even go out of business.

However, due to differences in regulations, expanding into new markets can be complicated. In the UK, insurers only need to deal with two regulators, but in the US there are different regulators for every state. Despite this, York expects UK InsurTechs to move into the US in the same way that FinTechs like Monzo have done. Ultimately, he envisions an insurance space where young, tech fuelled companies fill in the gaps left by traditional platforms to improve the experience for vendors and buyers.

“We shouldn’t just be trying to sell insurance,” says York. “We really need to start getting people more comfortable with insurance and understanding how complicated it is.”


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