Posted by Pankaj Kulkarni (View Profile | View All Posts) at 7:20 AM
If ever there were an industry that was open and ready for radical disruption, it's the insurance sector. That's one reason why so many new, nimble insurance companies have sprung up in recent years with completely different business models. Of them, in my opinion, the peer-to-peer model is one of the most promising and, quite frankly, realistic.
Why? Because the insurance behemoths commonly sell expensive policies that are 'cookie cutter' in nature. But, suppose you were a concert violinist who owned a multi-million dollar Stradivarius violin. You would have to find a specialized insurance agency who could come up with a customized policy for your precious instrument. The concept of peer-to-peer insurance is that (continuing with the violin example) you find musicians and rare instrument aficionados around the world who all have the same specialized insurance needs that you do. You form a crowd-funding community based on trust and a common theme. The more people who pay an initial insurance premium, the smaller the premium. What binds all peer-to-peer set-ups together is that if you don't make a claim during the course of a year, you receive a cash bonus. According to the peer-to-peer company Friendsurance, there have been cases recent years in which 94 percent of participants received some sort of year-end cash bonus.
Continue reading "Why Peer-to-Peer Insurance Is Coming Your Way" »
Posted by Pankaj Kulkarni (View Profile | View All Posts) at 4:49 AM
Elevator Pitch: An simple way to pick insurance?
While the foundation of insurance and what it stands for - protection of life and belongings - cannot and has not changed, the way it is managed and provided, can and should. Driving this change are a new breed of startups that are doing some exciting things in this space. With the integration of technology in insurance, many new areas like online policy comparison and insurance on demand have opened up and are on the rise. Large insurance behemoths are often unable to make their way into these areas as they lack agility and resources, leaving a lacuna that must be filled. For startups, this gap is an opportunity to make their presence felt in a multi-trillion dollar industry.
But what gives startups in the insurance sector the edge to do this? Firstly, they have the flexibility that large insurers lack. With the right digital tools, startups can quickly adapt and accommodate changes as and when they are needed. Next, investors are realizing the potential of startups and are ready to invest big bucks. According to CB Insights, in 2010, US$ 2.12 billion was raised by companies looking to invest in insurance startups. Of this, US$ 1.39 billion was paid out since 2014. This shows that there is no dearth of funding for startups in the insurance space. Thirdly and most importantly, startups have the advantage of cutting-edge technology and digital tools at their disposal that enable them to conceptualize, develop and offer the products and services that customers want.
Continue reading "Startups Start Up Insurance" »
Posted by Pankaj Kulkarni (View Profile | View All Posts) at 6:34 AM
Retailers risked being left in their competitors' dust if they didn't stay on top of digital trends. The smartest retailers have created seamless experiences for their savvy, digital consumers - whether online or in-store.
Believe it or not, the same is true for the expectations of digital consumers and their insurance companies. Whereas retailers can turn on a dime and react very quickly and effectively to consumer preference, with the insurance industry, it's a different story. That's because the insurance business is extremely predictable and runs on a very basic premise: that an army of actuaries utilize algorithms to determine rates for policyholders. If something such as a natural disaster occurs and the companies must pay out on some policies, those companies simply adjust the rates they charge to everyone. So the insurance company is always, always coming out on top no matter what transpires in the world.
Continue reading "Rise Of The Digital Insurer" »
Posted by Pankaj Kulkarni (View Profile | View All Posts) at 12:27 PM
A smart insurance company can learn what makes
potential customers motivated and use those elements in much the same
way that a video game designer does
If ever there were an industry that could use some outside-the-box thinking, it's the insurance sector. Little has changed in this business for centuries. Well, I have good news for you if you think insurance companies are all boring and thrive on the status quo. Some of the smart firms in this industry are using gamification to reach the vast, yet barely penetrated, middle market across the United States.
For years insurance companies have struggled to reach this lucrative market. It turns out that the same thinking that goes into designing exciting video games is helping them sell distinctly unexciting insurance policies.
Continue reading "Insurance Industry Learns How To Play the Game" »
Posted by Pankaj Kulkarni (View Profile | View All Posts) at 6:55 AM
Learning to leverage data in the insurance industry
I don't know about you, but the recent news that an eminent French academic has won the 2014 Nobel Prize in economics reminded me of the theory of so-called 'perfect competition.' One thing you learn upon getting a job in the real world is that perfect competition is hard to find.
In fact, that's one of the reasons Jean Tirole won the latest Nobel in economics. He began performing some pretty amazing research after the onset of the global economic crisis that showed how innovation is stifled in many industries that are dominated by a few large companies. Instead of there existing perfect competition between companies, the very biggest enterprises tend to set prices (simply because they can), sit back, and bask in the glory of a lack of any substantial competition.
Continue reading "Insurance Companies Learn That Leaner Is Better" »