Julian Teicke, CEO and founder of wefox Group
Let’s be completely honest: if you ask people today what they think about insurance most of them will tell you it’s an unpleasant experience. And why is that? Simply put, customers perceive insurance as being opaque, complex and unhelpful.
It’s for these reasons that insurance is up for the most radical change since the second millennia BC when the Babylonian traders began selling ‘policies’ to minimise risk.
Those customers bought insurance because it provided a measure of safety from the uncertainties of transporting goods from one location to the next, which naturally evolved into providing insurance against the uncertainties of life.
The idea of being safe is the fundamental purpose of insurance, which makes it one of the most attractive business models in the world.
Over time, insurance turned into a money-making machine in which the needs of the customer were replaced with the desire for pure profit. Capitalism fuelled greed by increasing capital returns over decades which effectively killed the fundamental purpose of insurance, which is to enable people to be safe.
Today the insurance model is profit-driven rather than customer-driven. So, when we launched wefox Group in 2015 we knew that the future of insurance is in owning the journey rather than owning the customer.
We have intentionally set out to upend the traditional model by placing the customer at the forefront of the experience in order to return insurance to its original purpose of enabling people to be safe.
To achieve this, we have to reimagine the customer’s whole life experience to make it easier, simpler and transparent. Insurance needs to become hyper-personal, hyper-modular and hyper-local. It has to be about the customer’s needs.
The emergence of the Internet of Things (IoT) data revolution offers enormous opportunities to truly transform the industry and reinvent insurance at scale because insurers will have access to an exponentially large number of real-time variables in order to price insurance products in real-time.
This trend will change insurance from a pure financial service to a service that offers proactive advice to reduce risk and consists of a financial service component only as an add-on to the core business model. Our product, ONE Insurance, is already at the forefront of this new insurance paradigm.
We have already built the architecture for this new insurance paradigm from scratch: highly modular products that can be turned on and off by the second based on data triggers from the IoT. For example, take bicycle accident coverage (module), that is only turned on when you are riding the bike (time-stamp) and is automatically triggered by sensors recognising that you are actually riding the bike (IoT triggered).
Now imagine for a moment that all this data is aggregated to predict the likely risks that may affect you and automatically builds the relevant products to minimise the potential risk in real-time. Insurance now becomes your best friend because it is delivering a proactive, risk-reducing and fully-automated service.
The customer is not only at the forefront, but also our product is enabling them to be safe by identifying potential risks before it happens.
Naturally, this type of product design surfaces questions about how to avoid negative risk selection. Hyper-modularisation only works if it is a requirement for the customer to have a subscription to basic modules in order to get access to further micro-modules.
And ultimately choice is always within the hands (literally) of the customer. Our mission is to fully empower the customer to make better life choices in the palm of their hands through these advanced insights that power our insurance products to enable our customers to be safe.
In many ways, we are building a product that becomes a life coach that empowers our customers to make better life choices. With the release of the ONECoach and the first geo-triggered travel insurance called TravelLight, in our partnership with MunichRe, we have taken the first steps towards realising this ambition.
Therefore, the emerging business model of insurance will be a risk reducing service for which you pay a monthly service fee and the financial service element will only be an add-on, thereby removing the incentive to put profit ahead of purpose, which created all this mess in the first place.
We are returning insurance to its original purpose when it first started out in the Babylonian times by applying data, technology and UX to put customers at the forefront of the experience.