Nobody gets excited about insurance.
Why is that?
First of all, the insurance industry has categorically failed to engage customers. As a client once told me: “you know what Louis, insurance UX is to UX, what military justice is to justice”. The good news is that the situation is (slowly) starting to change. Most insurtechs are all about the user experience and, with Amazon setting the benchmark, even big insurers are starting to up their game.
But there is a more fundamental reason why customers don’t care about insurance. For them, insurance falls into two categories: the insurance you have to have, and the insurance you should have, but never quite get around to buying.
This is how it tends to play out…
Insurance you have to have
In the case of mandatory insurance, like car insurance for motorists, or employer’s liability for businesses, you go to the insurer begging for cover — fearing fines or worse — all the while hoping the process won’t be too tedious or expensive. For the insurer, this should be an easy sale, but even then, plenty can go wrong.
Let me give you an example. When we were setting up Hokodo earlier this year, we had to get employer’s liability and professional indemnity insurance. So, we did the usual thing — we picked up the phone and called a broker to ask for a quote.
But to give you an idea of the kind of customer service (or lack thereof) you get from traditional players, the guy forgot to respond to us, and we had to send him several reminders before he eventually quoted us. Needless to say, we went elsewhere!
The insurance you should have
In the case of non-mandatory products (life insurance for individuals, cargo or credit insurance for businesses), the shoe is on the other foot. No one wakes up in the morning thinking: “I need cargo insurance” or “I need life insurance”. As a result, the majority of businesses and individuals are grossly under-insured, even in cases where the rational decision would be to buy cover.
You might be assaulted by an insurance agent or a broker every once-in-a-while, who will try to explain why you should buy a certain product that you’ve never heard of. But not only is the communication usually woefully poor, but it generally happens at completely the wrong moment, when you don’t need that cover — or at least, don’t believe that you do.
How do we make ‘should have’ insurance desirable?
The answer is, we can’t. At least not without spending shed loads of money.
Insurance is never going to have the desirability of say, the iPhone, and no amount of prancing around on stage in a black turtleneck will make it so. Insurance is more like a medicine that will make you feel better, but that you always forget because it tastes like rotten eggs and is tedious to administer. If you’ll forgive a slightly offbeat analogy, insurance is the suppository of financial services: very effective, but highly unpleasant!
Naturally, facing up to this fact is difficult for insurance practitioners, because it damages their egos. Who wants to admit that their product will never be the cool kid on the block?
But it’s time we faced the truth and stopped trying to pretend that insurance is an emotional product. In our view, this approach will never work on a large scale, because attracting people to buy insurance by the “push” model will always be confronted with prohibitively high costs of acquisition.
So, what’s the solution?
Instead of trying to get people who don’t care about insurance to come to you, you need to meet them when they really need it, by embedding insurance into other customer journeys. For example, invoice protection when you’re sending an invoice, cargo insurance when you’re shipping a container or employers liability when you’re starting a company.
It’s exactly the same journey that travel insurance has already been through. Travel insurance went from being a cottage industry distributed by insurance brokers and agents, to a multi-billion line of business through distribution on partner websites, like airlines or aggregators like Expedia.
At Hokodo, our ambition is to do the same with business insurance, by transforming it into a digital product delivered via APIs, on the sites and platforms that businesses use every day. So, businesses can get covered in one click, without having to deal with layers of salespeople, or lose precious minutes from their day… perfect when you’ve got more important things to worry about!