Trends in insurance with Caribou Honig

InsureTech Connect’s Caribou Honig explains how insurtech is upending the customer enjoy; how facts is allowing new risks, corporations and operating fashions—and why insurers must aspire to be dentists, no longer toothbrushes.

Highlights 

• Caribou suggests that carriers have to be greater like dentists than toothbrushes—this is, specializing in making the client courting as painless as feasible, in place of seeking to architect greater possibilities for engagement. 
• Channel partnerships that package insurance with other purchases—consisting of travel insurance with buy of a aircraft price tag—can be a clever play to improve the customer enjoy. 
• Digital-first coverage distribution may additionally allow uninsured or underinsured populations to “smash thru” actuarial tables. For instance, telematics might also help a good motive force in a high-threat demographic exhibit how effectively they drive.

Vanguards of coverage 

Welcome lower back to season two of the Accenture Insurance Influencers podcast. This season, we’ve spoken to Scott Walchek about how micropivots have contributed to Trov’s success, and Ruth Foxe Blader about why Anthemis invests in financial products for a digital destiny.  

Trends in insurance, with Caribou Honig  

In our first interview with Caribou Honig, we looked at the modern-day nation of insurtech and what to anticipate at InsureTech Connect 2019. In this episode, we dig into nowadays’s insurtech trends, separate truth from hype and speak the social implications of digital-first coverage products.

The following transcript has been edited for duration and readability. 

Welcome returned to the Accenture Insurance Influencers podcast, wherein we study how the industry’s vanguards aren’t simply adapting to alternate, however creating a dynamic future for themselves. I’m your host, Eagranie Yuh, and today my visitor is Caribou Honig.  

Welcome to the podcast, Caribou.  

Thank you, very satisfied to be here. 

Historically, insurers haven’t engaged that a good deal with their customers beyond factor of sale and declare, if some thing happens. And it looks like a variety of players are trying to alternate that. I recognize that you have a one of a kind view of things, that you explain in terms of dentists and toothbrushes. Can you proportion this with our listeners? 

Yeah, positive. This might be the fine metaphor I’ve give you within the ultimate couple of years, maybe my complete profession.  

I assume there’s a touch little bit of bank envy for insurance organizations. Thi there see this stage of engagement with the banking product that looks loads like a toothbrush. You use it two times a day. Wchook I awaken, I test my credit card balance, and simply before I nod off, I test my bank account to make certain I don’t have any overdrafts. Okay… precise. I can sleep nicely this night. It starts over the subsequent morning. And that could be a very excessive level of engagement, for reasons that I think are quite intuitive.  

You see a whole lot of coverage businesses––and start-usa properly––asking: Can we become like that toothbrush? After all, if the banks can, we are able to too, proper? And it’s not clear to me that that’s the right aspiration. It may also truly be that the proper way for insurance, as a product and as an industry, is an awful lot more like the dentist go to.  

Dentist visits are very treasured, but very one-of-a-kind out of your day by day use of the toothbrush. You move in as soon as each six months, you take a seat inside the chair. It might not be all that comfortable for an hour, however you get accomplished what’s done, you wish there’s no cavities. And you then set your appointment for six months later.  

It’s relatively low engagement, slightly uncomfortable, but it receives the activity completed. And it could be that that’s without a doubt lots greater the proper version for insurance, that “Yeah, you move do a brief checkup, make sure you’re protected appropriately, desire you don’t have any cavities—I imply claims.” And set an appointment to test again in six months and then pay your bill. That’s satisfactory. 

It’s not as enjoyable because the perception of the high-engagement toothbrush, but maybe the actual answer is that the industry ought to aspire to be a splendid dentist visit, rather than a toothbrush.  

Now, I will say the exception to that—if there’s going to be a toothbrush model for coverage, my intuition is it’s going to pop out of the Internet of Things kind of techniques. Think about the Apple Watch for tracking your fitness for each lifestyles and medical insurance. Or a water screen embedded inside the pipes in your house. Every night time it sends you a little message: “your pipes are fine.” That genuinely appears relevant. 

It may also certainly be the smart toothbrush, ironically sufficient, that proves to be an instance of insurance truly being more like a toothbrush. Tright here’s at the least one begin-up I recognize that gives a clever toothbrush as a part of their dental insurance bundle. That’s taking it actually, however I guess that would paintings.

I’ve heard others say something similar. For example, telematics could be very popular proper now and insurers find it irresistible because you get all this information, you could personalize the charges, you could higher recognize your client.  

But on the equal time, I’ve also heard a number of customers say, “I don’t want my insurer telling me how to force. I don’t want them to mention, ‘hi there you shouldn’t be braking so difficult.’” It appears like an imposition, and so I wonder how widely that applies to this toothbrush method.  

Do people really want their insurer to be concerned of their lives, or as you assert, is there some stability between the toothbrush and the dentist? 

I think that’s proper. That’s precisely proper. 

So permit’s follow this argument to the next degree. If insurers have to be looking greater at the dentist enjoy, what is an insurer—our analogy is getting a chunk muddy now—want to do to be a absolutely desirable…dentist? 

What makes for a very good dentist? One is that they’re thorough. Another is that they are trying to reduce the soreness along the way. And once they do discover a hollow space, they try that will help you navigate your options and deal with it quick.  

You name up your dentist and say, “I’ve got a toothache, definitely terrible toothache.” You don’t need to hear your dentist say, “Well, permit me ship a person over to test it in a week and a 1/2 and that they’ll take some images of it after which we’ll get around any other week or as a way to parent out how we want to deal with it.” (And I’m trying, of course, to create a barely absurd toothache adjustment manner there to actually kill our metaphor.) You want the dentist to say, “Sorry that your tooth is hurting so bad. We’ll discover a manner to paintings you in these days. Come on in.” 

Or—I’m going to move sincerely off the rails here—perhaps what the dentist need to say is, “You’ve were given a digicam on your hand right now, try to take a couple of photos of it for me. Text it over to me and I can provide you with, inside the subsequent 5 mins, a quick angle approximately whether this is some thing that needs to be seen nowadays, or whether or not to get you something for the ache but it is able to be dealt with in three days.” That is the broader theme I like, around beginning to outsource a number of the interest in a self-service way to customers themselves. 

And you’re beginning to see this, maybe no longer a lot in real dentistry, however you're starting to see this in components of coverage, particularly around the claims manner or the records entry system. The Internet is first-rate at permitting businesses to source some of the work needed for the product or the software or the declare, to certainly go to the client. But in a manner which absolutely makes the customer happier, because they can do it greater on their terms, on their timeline. You realize, I think that’s quite thrilling and I think that’s where the world is going here.

One thing that moves me in the description of our insurer/dentist, is that there is this multiplied focus at the client enjoy. I assume a number of those insurtechs sincerely have the client enjoy at the core of their imparting, and spot that as some thing this is less prominent with the traditional insurance revel in. 

Why is purchaser experience so vital and why is it the sort of valuable function of the insurtech world? 

I think about two major regions for it. One is the claims manner, and the other is the positive choice and price proposition aspect of the patron experience. 

First, the claims system. Where does purchaser churn come from? I suppose it basically comes from the declare aspect. (I think the alternative area it also comes from is the, “Hey, you may keep 15 percentage in 15 minutes,” so there’s a pricing thing.) But I assume a variety of purchaser churn finally ends up being the end result of dissatisfaction with the claims system—the claims experience. So thinking about how to make that says revel in honest, obvious and clean for the customer need to reap actual dividends in terms of decrease churn. And there may be actually the instance that we appear to keep coming lower back to: the 15-second claims revel in.  

This is one of the things I love approximately parametric coverage fashions: you may structure it so there may be no such aspect as a claims adjuster or a dispute, or claims decision. The threshold is brought about by means of, “Oh, you've got a drought as measured through the weather satellites in this acre. Therefore, 3 days later, you’re going to look this cash because the parametric crop coverage to your bank account.” There’s no claims revel in other than receiving cash in your financial institution account. I suppose that’s a quite precise claims experience. I honestly think that focusing at the claims patron revel in—structurally, now not just the handholding element of it—has energy for patron retention. 

The other region is if you consider the client revel in wrapped into product design. Not just considering what shade palette you pick for your cellular app, however the price proposition. What is the product you’re presenting and how are you structuring the trade of value? 

I reflect onconsideration on Health IQ as an interesting instance. They’re the people who follow me across the Internet showing me the ads: “If you can run a six-minute mile,” which I can’t, by means of the manner, “then we’re the existence insurance organization for you.” That’s a purchaser enjoy wrapped a great deal extra within the depth of the cost proposition than the coloration palette. And that’s one that I think is honestly pointed at driving high-quality choice and averting detrimental choice.  

I think rolling the purchaser revel in into channel partnerships is another example, right? I’m seeing a number of hobby where start-ups, in particular, are constructing out a few novel product and then embedding it into the proper point of a person else’s purchaser experience. 

Think about journey insurance; this has been around for a while. You’re buying your price ticket on Expedia and that’s the instant when an insurance corporation will provide you, in partnership with the channel associate Expedia, the coverage product. That’s genuinely very clever thinking about the purchaser enjoy.

One argument that I’ve heard from the incumbent side is that bundling—including the Expedia and tour coverage partnership—can be a simply clever consumer experience play. I suppose there’s a fear on the incumbent side that it renders the insurer invisible. You see coverage getting bundled with luxurious car purchases, or automobile sharing and those varieties of matters. I think there’s a fear that insurance starts to grow to be invisible, for that reason exacerbating this consumer enjoy problem. Does that make experience? 

It does, however I think it comes right down to a query of, “wherein is your supply of structural advantage?” If your supply of structural gain as an insurer is your brand—emblem awareness etc—then that’s a massive problem in this context. This shift is a chance to that type of competitive advantage.  

On the alternative hand, if your aggressive advantage is, for example, “we've got the high-quality generation stack and APIs for seamlessly integrating our product into channel partnerships,” then a world that actions to that embedded coverage model actually favors that insurance company, because by definition they've a bonus in that integration. I think it is able to reduce both ways. 

A similar capability that cuts both approaches is records. So I assume that incumbents have the benefit of tons of historic facts, of truly proper information of historical chance, and we’re arising to some extent wherein perhaps that’s not sufficient, or there are specific methods of doing it (for example, dynamic pricing based totally on Internet of Things data). Can you communicate about how information is enabling this next era of coverage technology?  

Again, I assume in some methods it comes right down to the claims side. Claims is wherein records is coming in most without difficulty, most effectively. And I assume that it’s a easier surroundings there, specially as compared to underwriting.  

You referenced telematics in advance—it’s sincerely difficult virtually. It’s a protracted procedure to incorporate telematics records into automotive underwriting. Not that there isn’t fee in it, however it’s a one-of-a-kind regulatory regime you’ve were given to control. You may need to rebuild a whole bunch of models with the intention to incorporate it into underwriting, invite a few regulatory scrutiny. It might not truely be culturally aligned with any form of conventional actuarial technological know-how. There is, in practice, a difference among actuarial technological know-how and facts technology, despite the fact that there shouldn’t be.  

But in case you deliver a few information to look for fraud within the claims facet, it’s just a lot easier. You can wager the mastering cycle is lots quicker to prove or disprove that a few set of data is absolutely incremental. I suppose that the regulatory hurdles are a lot much less on bringing new records or new information methodologies when you’re searching at the claims part of the technique. 

Can we speak briefly approximately blockchain? It looks as if it’s both the following Internet…or completely no longer the following Internet. What are you seeing? 

I suppose blockchain is a completely exciting sort of era. It’s exciting in element because ledgers are everywhere; ledgers are very not unusual, and so any new, sincerely one of a kind generation for retaining a ledger is thrilling. There are distributed ledgers of other matters. People use Google Docs all the time. 

I’ve got a magnet on my refrigerator and it’s absolutely a shared ledger. It’s referred to as the grocery list for the Honig circle of relatives. If you want to feature something, you upload to it. And in case you need to go some thing out, you may go it out. It’s no longer distributed. It’s centralized, on one fridge.  

There are some advantages of blockchain. But I don’t suppose it’s as magical because the photo some of the advocates need to create. It’s absolutely were given unique tradeoffs than other varieties of technology for retaining a ledger.  

When I assume about, “OK, when might a distributed ledger be the right solution, when could blockchain be the excellent?” I reflect onconsideration on two standards, which each ought to be proper. If they’re both authentic then blockchain is in reality, sincerely thrilling:  

• You have multiple parties maintaining their personal ledgers of a few common facts. 

• Those partners periodically spend time reconciling their wonderful ledgers of that information.  

So in case you’ve got 10 exclusive parties, all recording the equal simple info on their own organization ledgers and that they have to come together once a quarter and spend weeks looking to reconcile them, then that’s a amazing region to look at having a few sort of (likely non-public) allotted ledger, a few form of blockchain.  

On the opposite hand, in case you’ve got 10 corporations which are preserving their personal ledger, but they in no way feel like they should come together and reconcile it, then I don’t know why some sort of allotted model of that ledger is better than a centralized approach such as you’re doing these days.  

So I simply think it needs a actual framework approach to recognize whilst it’s higher and whilst it’s no longer as precise. What are the tradeoffs? What are the pros and cons, in comparison to keeping a sticky notice at the fridge or a Google Doc or an Oracle database?

Interesting. Another subject matter that comes up in InsureTech Connect is this reminder of the human side of insurance. I can’t do not forget your actual wording, however it become essentially, “it’s a generation conference, but on the end of the day insurance has an effect on human beings.” And I’m curious why you experience compelled to say that. 

I experience compelled to say it because it is so smooth at an enterprise conference—and in particular one that is focused on what’s coming and technology and innovation—to lose sight of the large photo, to lose sight of the why that goes past simply the egocentric monetary part of the why. 

Look, I spent nearly a decade at Capital One, in an industry that must exist. Credit playing cards are honestly quite beneficial and growing get right of entry to to credit is pretty beneficial. Capital One does that. But like a quarter pounder or the Whopper (whichever comes from McDonald’s), there can be too much of a good element. So you get phrases like “drowning in debt” or “being up to my eyeballs in debt” or “being on a debt treadmill.” I bet over time there, I came to get a little bit more non-public adulthood, considering the results of these things.  

One of the matters I like approximately the insurance enterprise and getting to play my little function in it, is that you don’t have human beings speaking about, “I’m up to my eyeballs in insurance” or “I’m on a few kind of insurance treadmill; I simply can’t get off.” If something, it’s tons more, “How can we get greater people to get the level of protection that’s in their very own self-interest?”  

There is also, returned at the claim side, making sure that claims are being adjudicated pretty and efficiently for people on all facets. So you do get an antagonistic element of that between the patron and the insurance organisation. 

But coverage is honestly a certainly treasured thing and for all the nerdy exhilaration I get about APIs, and moving insurance to the cloud and blah blah blah, I also get a actual non-public satisfaction, and I think every person involved have to get a real non-public pleasure over the good that this enterprise does for human beings. 

When I become preparing for our conversation I requested a coworker of mine who has attended ITC (due to the fact I actually have no longer) and that changed into considered one of her remarks: that as an awful lot as it was a tech conference, she become amazed—happily surprised—to peer plenty of discussion of ways those new products had been assisting get coverage to people who have been un– or underinsured, and how there has been quite a human drive to a whole lot of those businesses. 

A lot of technology innovation, quite a few “traditional” Silicon Valley is round product innovation and layout. And when you’re doing exact design paintings and appropriate product development paintings, you really need to have the human front and center of your thoughts. 

I like to say you need to be building for a focus group of one, and just make sure you’re serving that one ridiculously well. And you then hope that there’s other people like that one person you’re looking to serve––but really make certain you’re serving some desires of a few individual. The more you could clearly call them, the better—not abstractly, however “Oh yeah, this man or woman I realize might get value from this product or from this layout.”

There’s an exciting submit on the Atlassian weblog speakme approximately moral layout and some of the accidental consequences of something which could start out as fairly benign, or as something that ambitions to do social desirable.  

So I desired to speak a little bit about a number of those implications, especially as it’s insurance. Do we run a danger if these kinds of corporations are growing virtual-first merchandise? Does that, perhaps, favor a extra privileged patron? And if you take that to an nearly (hopefully) absurd consequence, do you turn out to be with this bifurcation of higher-threat those who aren't able to make this choice between a conventional product and a newer product, and these favored risks, who by using virtue in their privilege, have been able to pick something that gives them a better enjoy and a higher product?  

Is that a possibility and is there a duty of insurtech as an entire to ensure that doesn’t manifest? 

Well that’s a small and easy query to answer… I may be barely geared up in that I become a philosophy minor in university, we'd depend upon that a bit bit. I try and give a little thought to these varieties of things.  

But appearance, I’m no professional in ethics. Not through a protracted shot. Tools are just that, they’re tools. And how they get used is the result of many, many specific stakeholders and parties and entities in our society. Which is to say as a backdrop, the variety of outcomes may be very extensive and the range of fascinated events may be very extensive as properly.  

Now after I try and take this to the query of social implications of insurtech, I locate it beneficial to break up that between the underwriting side and the advertising and marketing facet. 

I truely find the underwriting aspect to be a little less difficult to get my head around. I think as a society we say that we’re now not going to fee, or make to be had, a product based totally on something that you can’t exchange about your self. So what falls without problems under that, as an instance, is ethnicity. Gender is some other one.  

Genetic factors are every other instance. I can’t in reality trade my genetics. Now that we can study a human genome for so much cheaper than we could 5 years ago, you continue to can’t use it for employer-based totally health insurance.  

We additionally upload, there’s a few things which you may trade approximately yourself, but that you have to by no means need to. Think faith. 

As a fashionable principle, the ones matters which you may’t or shouldn’t need to trade approximately yourself, we’re no longer going to underwrite on. But the ones matters which are your choices, which might be behavioral—like do you slam on the brakes hard, or do you smoke, or do you take your diabetes drug treatments—we are a lot more inclined to fee towards. 

Now there’s exceptions to these things. In the US, as I understand it, we nonetheless allow, on the federal degree, for genetics for use for lifestyles coverage underwriting. And we make a difference of, okay, well there are some places in which it’s greater pernicious, and different locations wherein it’s greater desirable. 

Gender is sincerely a clearly interesting one. Developed economies have come to exclusive conclusions approximately whilst and wherein gender can be used for underwriting of auto coverage. In Europe it's far prohibited, point blank. I consider most states—no longer all—inside the US it's miles approved. And that’s a really thrilling set of social coverage selections. On the only hand, we like the notion of gender neutrality. On the opposite hand, whilst you put into effect gender neutrality for car insurance, it way that in exercise, plenty of ladies are going to be subsidizing the coverage rates of guys, on common. 

I like telematics because it lets in underwriting based on some thing that’s behavioral. If you power aggressively, in a manner that creates more hazard, you may begin to make selections to pressure much less aggressively. And so I consider the person that may be absolutely a completely secure driving force, however has demographics or other records, like credit data, which places them right into a extra at-danger population. But through allowing them to show via telematics how thoroughly they power, they could smash through the actuarial records tables. I assume that’s surely very empowering for a person.  

The marketing facet is a touch bit extra diffused, and in a few ways is a little bit cleaner for me. The benchmark can’t be absolute uniformity of availability, due to the fact that’s kind of a false benchmark. I think of the benchmark as “What’s the provision of it nowadays?” and “Is making insurance available via your cellphone going to enhance that for a patron?”  

I personally live in a comparatively economically negative region. It’s in all likelihood a banking barren region; I can’t say for sure that it’s an coverage wasteland, but I suspect so. And I additionally consider that penetration of smartphones—perhaps not the ultra-modern iPhone, but a perfectly capable cellphone—is pretty excessive in my neighborhood.  

So I suppose, and I hope, that the availability of virtual-first coverage distribution and insurance merchandise will go a protracted manner to leveling the playing subject. This is a complicated, actual question. 

I’m satisfied you’re more of an optimist than I am, Caribou. I assume that’s in all likelihood why you were the VC and…properly, there are a number of different motives why I’m now not the VC, but you’re surely extra optimistic than I am. So thanks for that.  

Well, allow’s revisit in 5 years and spot who’s the higher file on that. We’ll see how it goes. 

Today we’ve been talking with Caribou Honig, the chairman and co-founding father of InsureTech Connect. Thank you very a good deal for taking the time to talk to me, Caribou. 

It’s been an absolute pride.

Summary 

• The coverage claims system is a prime candidate for reinvention, whether or not via upgrades to the claims enjoy, imparting more self-provider alternatives for clients, or using new and novel kinds of records. 
• Incumbent vendors should study their source of structural advantage, specially as embedded finance shifts the focal point away from emblem recognition and toward client experience and generation capabilities.  
• Many insurtech merchandise have potential to offer insurance to populations that are presently uninsured or underinsured. 

For extra steerage on insurtech: 

• Find out why companies with a better know-how of their customers’ digital wishes can thrive in the face of mounting disruption.  
• Learn why coverage customers are greater inclined than ever to proportion their information—and what they count on in go back.  
• Get answers to all of the questions you have got approximately blockchain (and have been embarrassed to invite). 

In our subsequent episode, we’ll reconnect with Ruth Foxe Blader of Anthemis to speak about why scale is so fundamental for insurtechs proper now. And after that, we’ll come back to Caribou Honig to speak approximately how incumbents and insurtechs can foster a greater resilient and agile industry—collectively.  

In the interim, you could seize up with earlier episodes of the podcast. 

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