ZhongAn proved that an automated platform can achieve massive scale. Lemonade removed the conflict of interest with their platform approach. Now we have Getsafe and their first-of-a-kind all-in-one insurance membership.
To find out more about this unique and innovative InsurTech pioneer, Rick Huckstep spoke exclusively with CEO and co-founder Christian Wiens
The InsurTech train has already left the station
The debate in the insurance industry is not whether the traditional model will change, but when. Some say within the next 3 to 5 years, some say within 10, and some say eventually. Personally, I’m in the much sooner than later camp, certainly less than 5 years from now.
Whatever your point of view, it is just a matter of time because this train has left the station. I see fundamental changes already in play today. And I’ve not doubt that there are many more to come.
This started with the first wave of #InsurTech. A Bezos-like focus on the customer defined this first wave, putting them at the heart of the InsurTech proposition. However, when the underlying insurance product remains the same, it doesn’t matter how good the digital experience, the old insurance ways of working will prevail.
The second wave of #InsurTech addresses the traditional insurance product. This completes the customer experience because it encapsulates both the policy and the claim.
And in so doing, it makes insurance more appealing to buy and it changes the dynamics of the relationship between the insured and the insurer.
Getsafe launch a first-of-a-kind insurance membership
The latest InsurTech to introduce a new and innovative approach to the insurance business model is Getsafe. They are the first in the world to implement a Lemonade-style platform approach (unless you know something I don’t!).
I recently featured Getsafe alongside Sherpa, another of the 2nd Wave innovators, in this article on the Digital Advisor.
The reason that Getsafe are interesting is that they are the first globally to adopt the Lemonade platform model. Only Getsafe have taken it a stage further. They’ve done what incumbent insurers have been unable to do with Life/Non-Life/Health multi-line coverage. Based in Heidelberg, Germany, the team from Getsafe have just announced further details of its innovative multi-line business model. You can read about these details in Christian’s blog here.
Now, I know what you are thinking. A multi-line insurer is nothing new!
Let me explain. Traditional insurers sell individual insurance products separately. Some will then link them together in a single-view-of-the-customer approach, although most insurers don’t have the wherewithal to do this. The issue and constraint for insurers is that they run insurance as separate business lines. Life, Non-Life and Health are usually individual business units with no structural or economic means to operate as a single entity for the benefit of the customer. Which means that incumbents may be multi-line from an inside out perspective but not as far as the customer is concerned.
Getsafe don’t work this way. Getsafe only have one insurance product.
What they do is to create one overarching insurance policy for their Members (which is what they call their customers).
|Getsafe don’t work this way. Getsafe only have one insurance product.|
The Members use Getsafe to decide on their Life, Non-Life, Health insurance requirements in a holistic way. These requirements are them built into a personalised package of insurance under the one over-arching policy.
This is what I call a My-Whole-Life approach (and one I predicted back in 2015 would emerge from InsurTech).
Getsafe are a tech platform with an insurance background
When I saw the latest news from Getsafe I called Christian to find out more. I wanted to know if there was real substance to the story or if this was another piece of over-inflated InsurTech hype.
I started by asking him to explain the Getsafe model and if it was (simply) a distribution play over a traditional insurance product.
Christian explained, “We run the whole insurance life-cycle fully autonomously on our own IT stack, from the frontend all the way through to the backend. We have full product development, underwriting and claims ownership within Getsafe. All the insurance we provide is our own insurance. For the regulatory side, we work closely with Munich Re, who provide most of the risk capital.
“Going multi-line (Non-Life, Life and Health) right from the beginning is the smartest solution from a capital perspective as well as for our members.”
More than (just) Lemonade for Europe
Which is all very well and good if you are from inside the insurance industry. But if you are a customer and this is all jargon to you, then the question “so what?” comes to mind. I asked Christian why he felt Getsafe was important for his Members.
“We are taking a flat fee to provide an insurance service. This is transparent and our Members know this”, Christian explained. “We donate the leftover (unclaimed) premiums to selected charities. This approach incentivises our Members to commit less insurance fraud – because if they do, they take money away from their social cause – and not from us.”
This is at the heart of the Lemonade model. But does that make Getsafe a 100% copycat? Christian explained, “Many people are asking us about this. We totally share many of their beliefs. But we are taking the insurance product a big step further with our multi-line approach.
“We can do this because we are not starting from scratch. We are insurance people with all the knowledge, data and resources of our brokerage business. We also benefit from unique access to reinsurer resources working directly with Munich Re headquarters in their home market.”
Reinsurers moving up the value chain
The thing to pick out from what Christian said is the relationship with a reinsurer. This is an emerging trend where tech platforms are tight with the reinsurer, effectively making the primary carrier superfluous except for regulatory reasons. (See more on this trend here.)
|This is an emerging trend where tech platforms are tight with the reinsurer|
In the Getsafe model, all of the individual modules of risk are aggregated and underwritten by Munich Re. Not only is this highly efficient for Getsafe (and Lemonade who operate a similar approach), it also gives them flexibility.
As the Getsafe business grows and expands into new areas, they can (simply) go get extra capacity from the reinsurance market. And lets face it, the best players in the industry when it comes to knowing how to manage risk capital are the reinsurers.
Which allows Getsafe (and the other emerging tech brands) to focus on giving customers better value and a better proposition.
Reducing the Cost/Income Ratio
Across all industries that have moved from analogue to digital ways of working, their cost of operations have come down significantly. Given that insurance is still a high friction industry, I wanted to know if Getsafe had acheievd the same levels of improvement in cost/income ratios that the likes of ZhongAn and Lemonade have achieved.
Christian explained, “We operate as a platform and take a fee from the premium. This removes the conflict of interest between paying claims and making underwriting profit. There is no financial incentive for us to not pay a claim. Our members know this and it builds trust between us.
“Our platform fee is 20% of the Written Premium for our Non-life products. For Life and Health they will be lower. A big part of being able to significantly reduce the cost of operation is down to our setup with Munich Re. We’ve been able to shorten the whole insurance value chain. (Note to reader, if you didn’t open the link before on this emerging trend, here it is again).
“We have automated most of our processes with a new multi-line policy admin system. This platform runs everything very effeciently in the background. It is a true innovation compared to traditional multi-line carriers who run multiple (outdated) admin systems for different business lines.
“It is not only the frontend but also the backend that is automated in a customer-centric way.”
Insurance is changing and there’s no going back
And there you have it!
Getsafe are a technology enabled insurance provider (aka, an InsurTech) with an new and innovative approach to insurance, defined as;
Lower cost of operations based on…
A highly automated tech platform supporting…
A shortened insurance value-chain that provides…
An All-In-One insurance policy…
Personalised to the unique circumstance of the Member that is…
Customer centric from the Front to the Backend…
Built on a long term trusted relationship (less fraud, less churn)
Insurance is changing and there’s no going back. It’s a matter of time and sooner rather than later, that’s what I think!
Rick Huckstep is the Chairman, The Digital Insurer. Rick is an InsurTech thought leader, keynote speaker, advisor and investor to tech start-ups.