Consumers Want Insurance Innovation and Technology

Insurance Consumers: They Always Win and They Want Innovation

Back in the 90s dot-com era, almost every company that tried to invest in insurance technology failed, leaving very few able and willing. Today, however, there is more insurance tech investment than ever before, but not in a traditional sense that one might expect. Rather, it’s flowing in through companies that are trying to disrupt the industry.

There’s a lot of talk saying LemonadeCoverhound, Policy Genius, Everquote, and Zenefits won’t succeed, but the playing field is different now for two reasons:

  • The Internet is everywhere
  • Insurance is not meeting customer expectations

Consider Net Promoter Score, which answers the question, “Would you recommend X to a friend/colleague on a scale of 1-10?” With an average industry-wide NPS of 28 (out of 100), the fact is we are not living up to customer expectations in insurance.

The rise of the Internet has now made it easier for dissatisfied consumers to engage with businesses. No matter the regulatory environment, capital or other challenges, someone will always find a way to satisfy them when they’re not happy, and innovators figure out ways to use technology to go after the incumbent market share with a new way to do business.

One carrier that is doing this unusually well for the industry is USAA, with a 2015 Net Promoter Score of 75, a giant leap of 47 points more than the industry average. So what are they doing differently? A lot, as it turns out.

Whereas insurance has traditionally played it safe in their approach to business (and not surprisingly…it’s the business of insurance to create safety nets), USAA’s mission is to do whatever it takes to benefit the customer. This customer-centric attitude makes innovation a top priority where ideas are vetted with an attitude of “fail fast, fail cheaply.” The carrier is not afraid to invest in new technologies, consider new approaches and test out new partnerships, including the one with Google Compare prior to Google’s announcement that it would be halting operations.

Jon-Michael Kowall, AVP of P&C Innovation, said that USAA was undeterred by Google Compare shutting its doors. In fact, the vast majority of ideas in their innovation incubator fail…but a few hit it big, and those are the gold nuggets they so successfully mine for. Its innovation center, ICE (Innovation Community for the Enterprise), boasts a tree sculpture with leaves that represent the company’s patents, which has over 1,100 for ideas by USAA employees.

USAA isn’t the only company insurance carriers should keep their eyes on. As mentioned in Innovator’s Dilemma: A Constant in Every Industry…Even Insurance, rules for established industries are changing. Non-insurance start-ups like Lemonade, Coverhound and Policy Genius are shaking up the industry, and they’re just getting started. With $2.65B in insurance tech investments last year, and a 36% increase in these investments predicted for 2016 according to KPMG, we’ve only seen the tip of the iceberg ahead as more and more companies like Embroker continue to burst onto the scene.

What this means for insurance is simple: The game is changing, and it’s changing fast. Incumbents who prioritize legacy systems over innovation and customer needs are going to lose market share to those both within industry and from outside that are more data-driven and customer-centric. “This is the way things have always been done” is no longer a sustainable reason to keep doing them that way.

The good news for those carriers that are just coming to this realization is that it’s not too late to foster a new culture of innovation within its organization. Knowing where to start can often be a daunting task, however, and a good first step is to know what’s on the horizon. This interactive 2016 Outlook Report is a great place to get a look at what P/C carriers need to know, whether they’re just getting started or are already well on the way.

Get the 2016 Outlook Report now


Kirstin Marr is the chief brand advocate for Valen Analytics, paving the way for prospective clients to lead the innovation initiatives required to compete in today’s marketplace. She has a passion for building companies that invent leading-edge technologies to improve customers’ lives and solve the inefficiencies that exist in many traditional marketplaces. Kirstin also has a long-standing commitment to philanthropy and community leadership. She was most recently Board President for Colorado MESA, a non-profit that serves underrepresented and economically disadvantaged students to graduate from college and successfully pursue careers in Science, Technology, Engineering and Mathematics (STEM). She also co-founded a non-profit to benefit the Teen Lounge at Children’s Hospital Colorado.