With so many industries constantly scoping the potential impact blockchain technology might have, and fresh off a consulting gig for an exciting Insuretech startup, it got us thinking: where could quick wins be had in this space?
The insurance industry has many layers of complexity and remains filled with 3rd parties that make up its ecosystem. Imagine a world where those 3rd parties weren’t necessary, because there was real transparency between the insurer and the insured (i.e. the customer/member).
- Hyper-personalised premiums: Right now, the lower risk members are effectively funding the higher risk members. With a member’s permission (facilitated by blockchain), the insurers can build much better profiles of each customer and their exercise and health patterns, resulting in a much more accurate risk assessment.
The flow-on effect: Hyper-personalisation is the holy grail for marketers. This would engender significantly higher brand loyalty because unrealistically high premiums remain a major pain point for customers.
Some applications: Motor vehicle insurance & health insurance.
In fact, if an individual customer took proactive steps to improve their health and wellness and this was tracked and captured by the insurer real-time (via apps or wearables), then their personal risk assessment could be updated and their premiums reduced even further. In this way, you could also reduce family premiums, whilst at the same time encouraging healthier living. What a win!
- Minimise friction around claims and quotes: Blockchain would allow customers to securely store their personal and pre-verified data, meaning that it would only have to be input once. Access could then be granted to someone at the insurer, for either immediate claims payment, or, in the case of a customer wanting to get several quotes from multiple insurers, a very straight forward process.
The flow-on effect: Time is our most valuable commodity, so an insurer that offered to significantly reduce the claims process would be a hero with customers, which would ultimately translate to higher retention and advocacy.
Some applications: Health insurance and travel insurance. For example, French insurer AXA launched a very interesting play called Fizzy in Dec 2017, which indemnifies against flight delays of over 2 hours and pays out automatically. Take a look at the video that explains it.
Is it likely that blockchain will resolve the issues of this industry in the short term? Probably not. But think of the possibilities it could bring down the line, the end result of which is customer empowerment and higher personalisation, both of which could lead to an increase in loyalty across a wide range of customer segments.
Note: This model could apply in countries which have variable premiums based on a member’s health; regrettably, at this stage, Australia is not one of those countries.
Max Savransky is Loyalty Director of Loyalty & Reward Co, a leading loyalty consulting firm based in Sydney. He has 10 years’ experience within the loyalty industry including roles at Mastercard Loyalty (Pinpoint), Silverneedle (Next & Sage Hotels) and Pureprofile. As Loyalty & CRM Manager at HOYTS, he launched the highly successful partnership with Qantas Frequent Flyer, including a world-first Qantas Points in-store redemption proposition. He is an active cryptocurrency trader.