The insurance industry has been notoriously slow to adapt to the modern era. Many of the same behemoths of insurance that have operated for over a century have been far too slow to adopt digital transformation. As such, new niches and opportunities have arisen for agile insurance start-ups or “insurtechs”. And customers are already reaping the benefits.
A New Form of Insurance
Unbound from the bureaucracy and outdated workflows of the incumbents, these new insurance providers can not only create and offer insurance products faster, but they can provide much cheaper, personalized coverage. Ranging from freelancer insurance to pet insurance and everything in between, these new providers can directly offer customers bespoke quotes that household-name insurers cannot match.
Where traditional insurers would create sweeping payment brackets for different demographics, new insurers can offer truly individualized quotes. Arguably the most promising sector for these new providers and their customers is car-insurance.
Car Insurance that Rewards Good Driving
It is no secret that car insurers have long charged higher premiums for the driver demographics deemed to be the greatest risk. Rather than a strategy focused on penalizing poor drivers, new insurance companies are increasingly adopting the inverse approach – rewarding individual drivers who have proven their skill and care.
Some car insurers, like Root, put this concept at the very core of their business. Root uses the slogan “Good drivers save money”, and it’s an approach they take seriously. While all auto-insurers consider an array of factors when working out pricing, Root makes their customers’ driving ability the number one determining factor.
A Fairer System
This approach means that drivers are not punished with higher premiums due to the existence of bad drivers nor for the other factors they cannot prevent. Take age as the classic example: in the US, car insurance tends to be most expensive for drivers younger than 25 and older than 70. For Root, no matter the age of the customer, their gender, or their marital status, if they drive well, their insurance will be cheaper. Using this system, Root claims that good drivers can save up to $900 per year.
Designed for the Modern World
How do these companies know who is a good driver? Thanks to technological advancements, this can be automatically measured by the insurer’s app. All the customers need to do is download the app to their smartphones and drive; the smartphone’s sensors will monitor and measure driving skills over the course of a few weeks and then work out a score and quote based on the skill level it detects. The discount for safe driving is then automatically applied.
Opting for these app-based modern insurance providers has other benefits too. Unlike the incumbents which still rely heavily on paperwork and antiquated systems, these new insurance products are truly designed for purpose in the modern era.
Customers no longer need to search through their piles of stored paperwork to find out their policy wording or the details of their coverage. Instead, they merely need to visit their provider’s app which will contain all the important and necessary information as well as sections for offering advice, adding other drivers to the policy, filing a claim, upgrading or extending coverage, and more.
Sounds to us like it might be time for a test drive.