The Insurance Industry Is About To Change BIG TIME— Because It Has To
The insurance industry is facing huge changes. Buying insurance locally from the consultant is obviously a phase-out model. Tech giants are likely to shake up the market massively in the next few years.
Let’s take a look:
Amazon already offers insurance for individual devices through Amazon Protect. But there is room for so much more. AMZN has a decisive advantage over traditional insurance companies: data. We have already seen this at Tesla in the last few months. The electric car manufacturer insures its cars itself — more cheaply than the competition.
We know that Prime customers have the habit of buying basically everything that is possible from Amazon. The e-commerce giant knows what we’re interested in, when we’re looking for what products, when we’re home (Alexa, Ring), what we like to eat (Amazon Fresh), and even when we’re pregnant, before we’re pregnant. No insurer has this kind of data — and they probably never will get it in this detail in the future.
I think it is out of the question that this data will not gradually be used for more and more insurance purposes. The market is huge. Americans spent $3.65 trillion on health care alone in 2019, which was 18 percent of the US GDP.
Customer satisfaction — no matter what type of insurance you have — could also be a key factor here, too. New companies in the industry, such as the New York start-up Lemonade, show where the insurance journey is headed: with simple questions and short explanatory texts, policies can be taken out quickly on a cell phone.
The main indication that AMZN is serious, however, is probably the cooperation with Berkshire Hathaway and JP Morgan, with whom Amazon has founded the health insurance company “Haven”, which is initially intended to be for its own employees and is, according to its own statement, not profit-oriented for the time being.
Another giant from whom the insurance market is unlikely to be safe is Apple. The company from Cupertino also already offers equipment insurance for its devices with Apple Care. With Apple Watch, the company has launched what is perhaps the most widely used health gadget on the market, which is used by tens of millions of people every day. Starting as a gimmick, it has been joined in recent years by functions that must be taken seriously — going from blood oxygen sensors to ECG.
If the watch detects irregularities in the heartbeat, it alarms you. It also motivates people to do more sports, which is a key factor for a healthier lifestyle. This has already been recognized by some health insurance companies which grant their customers a discount if it can be proven that the watch is worn.
Apple is also known for constantly penetrating new industries — and benefiting from its hundreds of millions of customers to do so. Recently, AAPL has proven this with the Apple Card, for example. This is certainly not the best credit card ever, but it is widely used, fits perfectly into the Apple ecosystem and is easy to understand.
Corona will accelerate the trend that the vast majority of all insurance policies are taken out online (or by telephone). Whether this is a strength of many insurance brokers who are used to 1-to-1 customer contact remains to be seen.
Through the Internet, the customer gains in power. Comparison portals make it easier to find the insurance with the best conditions. The margin of conventional insurers will decrease. Consultations via video call or explanation video, which are used by some insurers now, appear helpless. I as a customer do not want to be advised like this and feel annoyed by this pseudo-digitalization, like hey „we have an Instagram account and make video calls“. Like, just make it quick — okay?!
What do I think insurance — no matter what type — must look?
I think the path is pretty clear: They must be cheap, easy to understand and monthly cancellable. Also help must be available 24/7 by phone or chat. It also has to be easier to move from insurance A to insurance B — should be possible in minutes. Just like a cell phone plan.
For example Amazon and/or Apple could perhaps make exactly that possible. They have the trust of their customers. Simplicity and user-friendliness are top priorities for both companies.
Of course, it is important to note that this is a highly complex issue, where it will certainly be years before anything tangible is done.
It also remains exciting to see how conventional insurers react to potential competitors.
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