Finding an affordable car insurance policy seemed like an impossible task for Nicole Scheufler. She lives in a busy part of San Diego and has been rear-ended a few times. After her last car wreck, “the insurance rates were insane,” she says.
But she found a policy, thanks to a new way of buying insurance called Gab.
Scheufler, a research scientist, discovered Gabi’s app, which searches for an affordable insurance policy and allows you to compare policies.
Gabi is part of a group of insurance sellers int the emerging insurtech space, mostly startups that use technology to find both savings and efficiency in the insurance industry. They’re also turning the industry’s focus away from making quick sales and toward building long-term relationships that could benefit both consumers like Scheufler and forward-looking insurance companies alike.
“We do the shopping for customers who sign up,” explains Hanno Fichtner, Gabi’s CEO. “For most customers, we are able to find a better policy. But if we don’t, we tell them, ‘Stay put, you already have a great policy.’ We are transparent, where most traditional insurance sales organizations are all about the sale.”
The Gabi app helped Scheufler find a policy through Clearcover for her 2015 Mazda CX5 that cost about $100 a month, hundreds less than her previous policy.
“Clearcover was the only insurance company with a reasonable rate,” she says.
Her experience is repeating itself hundreds, if not thousands of times a day. Insurtech is one of the hottest insurance trends, according to experts.
“Millions of dollars have been invested in startups bent on disruption, and a lot of the changes are designed to make the buying process much simpler for consumers,” says Virginia Hamill, an insurance analyst at FitSmallBusiness.com, a personal finance site.
Among the insurtech innovations: leveraging artificial intelligence to reduce call times with agents, using data to deliver a wider range of benefits, and even harnessing virtual reality and gamification to complete health screenings, says Hamill.
New ways of buying insurance
As it turns out, Clearcover is also part of this disruption. The company, founded in 2016, was built to make buying insurance fit naturally with moments when insurance is actually relevant to consumers, explains Kyle Nakatsuji, Clearcover’s CEO.
“We believe that the old paradigm of insurance marketing is being replaced by new insurance distribution powered by context, efficiency, and relevance,” he says.
How is Clearcover delivering it? It has an application program interface (API) that works with companies that offer insurance advisory, automotive, or financial services and are interacting with consumers when insurance is relevant to seamlessly serve up Clearcover at the moment.
“Because we built Clearcover’s operations and technology platform from scratch to support this emerging distribution model, we can operate much more efficiently than other insurance companies,” he says. “As a result, our customers, on average, see much lower rates from Clearcover.”
And that’s how Clearcover could offer Scheufler such a huge discount.
It’s the API, baby.
More new ways of buying insurance
Insurance companies aren’t letting the startups have all the fun. Take Penn Mutual, the 172-year-old life insurance company based in Horsham, Pa. Last year, the company rolled out what it calls the Accelerated Client Experience (ACE), a new digital platform that streamlines the application process and decision-making time from an industry average of 30 days to as little as 24 hours.
“As of January, over 1,800 advisers have submitted business through ACE, representing $8.5 billion in life insurance face amount with 60 percent of eligible cases being submitted on the platform,” says Penn Mutual president Dave O’Malley.
It’s not just how you buy insurance but what you insure. For example, Traverse Insuranceallows you to choose from a list of items you want to insure, including personal electronics, sporting equipment, musical instruments, cameras, and jewelry. It also offers liability, ID fraud, and travel insurance.
“It’s a completely new way to buy insurance,” says Beth Maerz, senior vice president of customer experience and innovation at Travelers. “It’s designed for consumers who may not need a traditional home or auto policy. It can serve as an alternative to renters insurance by including personal liability coverage that meets most landlord requirements. It also offers identity theft coverage and protects things like mobile phones, laptops, musical instruments, jewelry, and even some vacation experiences.”
Coverage varies. For example, you can insure your smartphone and other electronics starting at $2 a month, while $100,000 in liability coverage cost $2.95.
Shifting attitudes toward buying insurance: It’s about the consumer
There’s a broader theme here. The insurance business is slowly shifting from one focused on sales to one focused on people.
“Traditional quote comparison sites attempt to immediately monetize the customer and often view customers as leads they can sell in the broader insurance marketplace,” says Fichtner, Gabi’s CEO.
Previous online sales efforts have harvested email addresses and phone numbers from prospects and then spammed them with sales pitches. In the short term, that’s the most profitable way of selling insurance.
But according to Fichner, “There’s much greater value in building a relationship with consumers and having the opportunity to serve their insurance needs.”
“A key value proposition of our approach to insurance is to remain the customer’s licensed, professional insurance advisor indefinitely,” he adds.
To that end, Gabi encourages users to create an online account where they can monitor their insurance and compare rates again without having to fill out more forms. The focus has shifted to the consumer and to building a long-term relationship that can yield repeat sales.
And it’s more efficient, too.
“Insurance distribution doesn’t have to consist of paper, phone calls, or billions in TV ads,” says Nakatsuji, Clearcover’s CEO. “Instead, digitally empowered advisors of all kinds will be able to provide consumers access to better products at lower prices due to partnerships with more efficient insurance carriers.”
But it’s not perfect. I signed up for the Gabi app and felt a little nervous about handing over a lot of the personal information it requested, such as my email, cell phone number, and the password to my existing insurance account. For reasons that aren’t entirely clear, Gabi didn’t accept the password and asked me to download a copy of my current policy, which took a while to find. That was three days ago. I’m still waiting for my quote.
A Gabi representative said the site had “an unexpected 500 percent increase in traffic in last two days,” which led to my delay.
Still, this combination of technology and a new focus on consumers has the potential to turn the insurance industry on its head — if it hasn’t already.
(Featured image by BLACKWHITEPAILYN via Shutterstock)
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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