The insurance industry – an industry that has historically remained risk-adverse and slow-moving – is being redefined and revamped by a wave of technology-savvy start-ups. Going hand in hand with the insurgence of these innovative and disruptive approaches to traditional insurance models, is a trend towards additional transparency. In our latest round-up, we explore 3 recent developments of InsurTech companies set to shake up the insurance industry.
Wrisk – the all-in-one mobile app for insurance
Meet Wrisk – the latest mobile app to disrupt the insurance industry. The InsurTech has already amassed an initial investment of £3 million from investors, such as Hiscox, surpassing their £500,000 crowdfunding target in just two days. But with so many new InsurTechs entering the market, why are investors like Hiscox so eager to fund Wrisk? Describing themselves as “insurance for the connected generation”, Wrisk has been designed to attract the surprising 61% of UK renters with no contents insurance and 31% of young people who have never bought travel insurance. So, how are Wrisk tapping into this insight? Their mobile app enables customers to buy and manage multiple types of insurance in a single plan. Each customer is assigned a ‘Wrisk score’; a sort-of credit score for personal risk, to ensure better, more transparent pricing. App users are then billed monthly Netflix-style with the option to change or cancel their insurance plans at any time.
Laka – the fairest bicycle insurance of them all
More specialized than Wrisk, London-based start-up Laka, has already raised £1.1 million in seed funding for what it calls “crowd insurance” – an extremely unique insurance model whereby customers only pay the true cost of cover. Initially targeting high-end UK bicycle owners, the cost of claims is split fairly between customers at the end of every month. This means that customers’ premiums will be zero for months with no claims. Individual maximum premiums are capped at the “market rate” set by Zurich, who are financially backing the disruptive bike insurer. In stark contrast to traditional insurance companies, Laka will only make money when settling claims. As co-founder Jens Hartwig explains, “by changing the way we earn money in the business model, we fixed the conflict of interest between customer and insurer”. And it seems that customers have already benefitted as Laka users have saved more than 80% compared to market prices.
Lemonade Policy 2.0 – turning traditional insurance policy on its head
US-based Lemonade became synonymous with revolutionising the insurance industry when it first launched in 2016. And they’re set to disrupt the industry once again -with Policy 2.0. The new renter’s policy has been radically simplified with up to 90% less words than ‘industry standard’. Claimed to be the “world’s first open source insurance policy”, the policy will be open for anyone, including competitors, to contribute to its design before being brought to market. Co-founder Shai Wininger explains this unorthodox move. “As avid open source evangelists, we believe that bringing consumers and professionals together in an effort to co-create an insurance policy, will result in a better and fairer insurance product for the 21st century”. Once launched, users can edit and tailor each policy based on their own choices. Despite the potential risk of this Wikipedia-esque policy, Lemonade will have final approval before any changes are made.
Transparency is the best policy
It’s clear what Wrisk, Laka and Lemonade all have in common. Making insurance better, fairer and more transparent for the end consumer. As Lemonade underscores on their website, “Transparency is the best policy”. Legacy insurers are facing increasing pressure to evolve and innovate to keep up with the new players in their industry. But InsurTechs represent more of an opportunity than a threat. And many incumbents have started to collaborate with the ‘little guys’ to stay relevant in an increasingly digital environment.