The 2020 Cover Insurtech Conference saw industry experts speak on the importance of digital platforms as the very backbone of insurance technologies. Brad Smith, one of the founders of JaSure (underwritten by Santam Limited), was amongst those sharing his expertise, where his focus was the use of platforms for distribution purposes within the insurance industry.
The term ‘platform’ has a number of uses within a tech context, but a common one is a technology-enabled business model that creates value by facilitating an exchange between parties. For example, this exchange is evident in the rental of accommodation between buyer and seller on Airbnb. It is often accompanied by information sharing, such as customer preferences and reviews. Network effects are critical and can be seen to strengthen a platform, where growing numbers add to the value of the offering, such as more availability of accommodation for the Airbnb model.
In further elaborating on the properties of platforms, Brad mentioned factors including the incorporation of cloud technologies, automation, big data analytics and AI; the importance of mass personalisation; and the use of data and analytics to ensure market efficiencies, such as dynamic pricing to match supply and demand.
Aggregators and Brokerages
Brad went on to outline a variety of platforms and how insurance offerings can benefit from such digital ecosystems. In the example of Airbnb, a typical marketplace platform, insurance would take the form of an add-on for those looking to host. As an alternative to the marketplace, insurers are employing platforms as aggregators, such as US-based insurance comparison site The Zebra, which sources quotes for consumers. Insurance management apps are also becoming increasingly popular, where the platform functions as a digital brokerage, such as is the case with CoverHound.
Platforms are also allowing insurance to be sold in conjunction with the primary digital offering, which has little to no cost. For instance, Dobby in the USA is a home maintenance platform that monetises predominantly through selling insurance from various providers. In South Africa, Aerobotics monetises in a somewhat similar fashion, offering an inexpensive drone service to farmers that assesses the health of crops and monetises this information via crop insurance companies.
Instead of relying on third party platforms, insurtechs like JaSure have built their own platform which offers a direct connection between consumers and the carrier. Often referred to as a technology platform, JaSure has custom built most of its app and backend systems, rather than buying in solutions, automating a great deal of the traditional insurance lifecycle.
However, the start-up has not shied away from using a collection of web-based solutions, as is typical when assembling most modern digital insurance solutions. For example, when it comes to hosting, JaSure uses Amazon Web Services and for live-chat and support technology, Intercom has been their choice. It has also relied heavily on open source technology.
Finally, Brad touched on the opportunities and risks presented by platforms for insurance companies. In terms of opportunities, platforms such as those discussed can provide the scale insurance companies require, while allowing the conversation regarding insurance to take place at a more natural time in the purchasing cycle. There is also the benefit of personalisation, where rich data can drive adoption, as well as the effect of embedding insurance in a digital environment with quality customer experience, so as to improve uptake.
On the risk front, platforms require partnerships with other companies with the accompanying challenges of such relationships. There is also the risk of disintermediation, such as where a platform holds the relationship with the customer and then decides to either discontinue the use of your product or switch to another insurance provider.
Brad wrapped up with the risk of multi-homing, which would be the case where an insurer selects a particular platform to win customers and thereafter customers shift towards a competitor platform.
For more information on JaSure, an insurance platform offering on-demand cover for personal assets, where you pay only when you switch on your insurance, please visit www.jasure.com. Santam Limited is an authorised FSP (3416). JaSure is a juristic representative of Santam.