The insurance sector lagged behind its financial cousins when it came to adopting digital solutions. But tech-driven transparency coupled with a human touch forecast a bright future for this industry.
An article in Computer Weekly in 2020 called the insurance sector the “digital laggards” of finance. In the same year, the managing director of Insurance at Accenture for North America hypothesised that the reason insurance was so slow to adopt new tech was that it lacked talent. This sentiment was mirrored in a report by McKinsey — also in 2020 — which concluded that the insurance industry needed help in how to implement a full-fledged digital strategy.
“Insurance felt like one of the last frontiers, something the incumbents just hadn’t been able to turn into a great digital experience,” says Sophie Bohr Grønbæk, co-founder and CEO of Undo, a Danish digital insurer with nearly 40,000 users, and a zero-fees approach to insurance. “Insurance was still being sold in an old-school way.”
Noticing a gap in the financial sector, Grønbæk and her fellow co-founders took the plunge and decided to do the impossible: Disrupt the Danish insurance scene by offering digitally-driven insurance that was quick to sign up for, completely transparent, easy-to-use, and customer-centric — with a human touch.
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The problems with traditional insurance
Grønbæk and her team surveyed people in their twenties to determine what problems they were running into with traditional insurance. They discovered that:
- Traditional insurance offered opaque, confusing packages with hidden costs.
- People had immense difficulties filing claims.
- Processing the claim took an inordinately long time.
The other problem was how certain demographics were placed into “high-risk” categories, such as under-25 drivers, and so were made to pay much higher rates for insurance when they might be, in fact, very careful drivers.
To solve the above, Undo took a high-tech approach to transparency that opened the door to fair and ethical insurance for consumers.
“Insurance felt like one of the last frontiers, something the incumbents just hadn’t been able to turn into a great digital experience,”
Sophie Grønbæk, co-founder and CEO of Undo
High-tech transparency — Usage-Based Insurance (UBI) and Telematics
UBI is insurance based on how you personally use a product. UBI provides transparency for the insurer because it offers insight that helps the insurer better understand its risks.
Before signing up for car insurance through Undo, users can do a test drive and opt-in to have their driving patterns analysed through something called vehicular telematics — the sending of data regarding the vehicle to a separate system.
Specifically, users drive around for a period of time with the Undo app on their phone, and the built-in telematics checks for things such as:
- Hard braking
- Excessive speed
- Hard cornering
- Acceleration patterns
- And so on.
All processing is done on the user’s device, and only a limited amount of data is sent to the insurer, such as number of kilometres driven and some metadata such as the score itself. Absolutely no location data is sent.
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Consumer-centric approach
In the same McKinsey report referenced above, the international consulting company says about digital technology: “Consumers, not companies, are often the ultimate winners.”
Undo is upfront about its fees (they have no additional fees) when the user signs up. They also offer an intuitive interface that makes it easy to choose an insurance product. Users can sign up for insurance in five to 10 minutes, says Grønbæk.
Also, if a user insures, say, a bicycle and then sells the bike halfway through the month, they can simply deselect the coverage for their bike through the app and receive a refund for the rest of month.
“It’s not a huge amount. But we want users to feel a one-to-one relationship with us,” says Grønbæk. “We want them to know that our purpose is not to be greedy and take as much as we can from them.”
The future of fintech: The human touch
In an article titled “Human touch in FinTech is key to growth,” written for Payments Business Magazine, Chief Commercial Officer of Bambora in North America at the time, Ryan Stewart, wrote: “The value of human touch can come in many facets. From helpful staff available to assist customers while signing up, to always being there to troubleshoot an issue.”
Undo’s human touch to insurance became most apparent during the COVID pandemic. Their travel insurance product uses GPS tracking and only charges people when they are out of the country.
When it looked like airports were going to close down as a result of the pandemic, potentially stranding people in foreign countries, Grønbæk and her team got on the phones and personally called those clients, proactively urging them to get to the airports as fast as possible. They were only able to provide this human touch as a result of the sophisticated tech that their Insurtech product operated with.
To hardened Luddites, the idea that cutting-edge tech could lead to a more humane and helpful society might seem contradictory. But to those in the fintech space, working for better transparency, easier transactions, and little savings here and there that add up to a lot of customer satisfaction, it is part of the greater vision that keeps this sector innovating at lightning speed.