The insurance industry is in a race against time to rejuvenate their offerings to an audience whose demands are different from anything they’ve seen before. During a time where Millennials are driving business innovation, it’s important to consider what this generation’s insurance needs are if your business is going to move forward.
While traditional insurance companies are still very much relevant among an older generation, Millennials are taking more of an interest in offerings based on simplicity and personalisation. Thus, the shift towards peer-to-peer insurance companies has begun.
These companies use social technology to allow a group of like-minded people to pool their premiums together. And doesn’t it make sense for people with similar insurance needs to be grouped together? For example, the premiums of those with similar risk profiles won’t necessarily be affected by high-risk individuals because you can simply choose to exclude them from your pool if need be. Similarly, by pooling premium funds with people who know each other, there’s a greater sense of transparency. Every member knows who’s in the group, who’s filing a claim and how much money there is left in the pool.
“As Millennials are a community interested in innovative technology, they’re always keen to try something new,” says Drew Schnehage, Commercial Director at Innovation Group. “Peer-to-peer companies were able to find a gap in the market and provide this generation with something they didn’t even know they were looking for,” she adds.
Besides catering to the needs of Millennials and other future consumers, these companies’ clients are also at an advantage because their premiums are often lower than those associated with traditional insurance companies. “Peer-to-peer companies are able to lower your insurance premiums by cutting down on costs often associated with large companies,” explains Schnehage. These companies rid themselves of costs involved with spend on employees, advertising and tech expenses for example, and instead invests it in reinsurance and paying claims.
You’ll also find filing claims to be a lot easier, and pay-outs are often made in just a few minutes. Because Peer-to-peer companies are primarily digitally driven, it allows for streamlined processes that make for a better user experience that even the biggest players in the sector can’t match.
“While the insurance industry is often criticised for their lack of innovation, this move toward technology breathes new life into an age-old service.” says Schnehage. “By answering just a few questions online, you’re able to immediately receive a quote and make your payment using the same portal, which is key during a time where ease of use can make or break a business model.”
Peer-to-peer insurance has already disrupted the industry through its ability to offer better premiums and more personalised policies for the generation that thrives on convenience and value for money. While these companies are all digital, they do not cater to those who cherish relationships with insurance agents for example. It’s also a new development, so their market share is still small. Despite this, there’s still a great movement towards these innovative companies, and they’re likely here to stay.
Drew Schnehage, Commercial Director: Innovation Group South Africa