Suppose you were a brand new brokerage? Online only, got your ideas mapped out on a webinar pitch, funding in place, logo designed and some regulatory boxes already ticked. Great. How do you start building products, what are the first steps? IE talked to Andre Symes at Genasys to find out more.
IE; Let’s say I wanted to offer a new home insurance product that capitalises on the Alexa, Ring doorbell, smartphone location data streams that the household generates. My ideal customer has got a Leakbot stuck on my pipes, plus a smart fridge that orders the beers in when stocks are getting low. How do I start the process?
AS; There’s lots of merit in thinking about what the customer wants in an ideal world and then building it for them. It is easy to fall into a trap similar to some construction projects, where you have an amazing design but is the building useful in the real world? Sometimes you can build something that’s really cool, but for a variety of reasons it doesn’t catch on – the engineering behind it isn’t quite right. This is the problem for a lot of insurers; they don’t have the right tools to deliver on the great idea.
The other thing that can happen is that you have a fantastic prototype idea, bit like a custom concept bike at a motorcycle show. It wows the crowd, but the end result two years later is that something kinda similar, but watered down, actually goes into production. So you need that balance of cool features, some new ways to solve old problems, speed up admin, add-on extras that make the product customisable and so on. And this is where many hit a stumbling block – their tech can’t keep up with the direction of travel.
IE; PAYG is becoming the new default setting for so many insurance products right now, how can our mythical online broker create usage-based stuff?
AS; The interesting thing about legacy – or many existing systems that insurers have – is that they are designed to operate at scale; to process thousands of policies, keep data secure, quote based on lots of different data etc. But they also have things like policy inception dates and end dates.
Now think about that for a moment; if you create a car, scooter or bike policy and it switches on when you use the vehicle, then goes off when it’s parked, how does that sit within your legacy system? It can’t. It’s too complicated having that incept date constantly activated, then the policy closed again. Then consider all the internal admin that is created around a policy; emailing documents, compliance in different markets, your own Sage or Quikbooks accounting ledger and
more. And of course there are underwriting challenges as well. All this leads to compromise and you can’t build the product that you originally set out to do.
For insurtechs, the stumbling block is how to incorporate their tech back into their carrier. To do this at scale requires huge effort on the part of the insurer. It is fairly easy to build a bespoke ecosystem that handles just a few thousands policyholders per year. But if the new product catches on, insurers will want it to sit on their core system which requires major investment. It is more cost effective to buy an off-the-shelf software as a service solution to test the product, see if it works, if it can easily consume IoT inputs. If it does and if it hits scale, you justify the cost of the reprogramming required to be able to run the product on the core platform.
IE; Is there a way to bench test your own new brokerage as you build your product portfolio?
AS; The big thing in product building right now to speed things up is the use of no-code or low code tools allowing you to build something like a Lego style system. creating your own design from scratch although without bespoke tools, you’ll only be able to deliver something that may well look like something else already out there. If you want to differentiate your product, you need something extra. As you build up your business you are of course testing stuff, all the time, tweaking it here and there. No-code tools let you have this fine control and you can do this stuff in-house. That’s great of course, but you do want to make it different, unique in some way, because that’s your branding, your USP.
IE; In some ways insurance now is at the same point online retail was at maybe 20 years ago. There are all these ideas, tech that speeds up processes, but in the end perhaps only a handful of brands will actually become giant players in the long run, the eBay, Amazon or PayPal of the future?
AS; You know the You Tube/Netflix generation is growing up and buying insurance. They might not always want to but that’s life, it just happens. So a market is now there which didn’t exist before; internet savvy consumers who are used to paying for stuff on a subscription basis. And there are new insurance markets opening up because of our online lifestyles. Not just the pandemic, workingfrom-home thing, but more cyber protection, ridesharing on demand because councils are banning cars from city centres.
All this stuff is happening now and some insurtechs are already well down the road in terms of building products for the future. Sometimes you can launch too soon, before the market is really ready, so I’d say that timing is a big part of all this. Build your product right, but launch it at exactly the right time. The technology is always ahead of the humans, ahead of underwriter’s appetite for the risk.
IE; So when a city like Oslo says it will ban all private cars from the centre, then that is the exact moment to offer e-scooter, ridesharing or electric bike cover online, because suddenly there is that spike in demand?
AS; Exactly and we are going to see much more of this as politicians change the way we live, companies develop hybrid home/office work patterns, technology links all kinds of devices, payment services replace traditional banking and so on.
IE; Exciting times, thank you Andre.