Insurance Solutions | Georgina | 19 October 2018

When we look at Insuretech disruptors such as Wrisk, Lemonade or Buzzmove, technology is key to their success.

However, the real weapon of the disruptor isn’t in the development of technology, it is in the application of existing or new technology developed by others.

Technology is their means, the engine of their disruptive innovation but to apply technology quickly, very few disruptors build their solution from the ground-up, entirely on their own. To lower costs and reduce development time they employ technology partners to enable their solutions.

Meet the Technology Enablers

The enablers are the technology business partners which power the disruptive innovation space. While their presence might not be recognised by the end customer, to the disruptor, those tech-partners are indispensable.

A key component to any disruptive innovation is system connectivity. Disruptors need effective and robust connections between their management systems and the API that powers apps, websites or portals. Endava’s Agile Startup methodology coupled with Agile Bridge as a core technology, allows disruptors and established businesses alike to quickly and efficiently build system-to-system connections, even between systems which wouldn’t ordinarily communicate with each other.

Designed to deliver the connectivity demanded by Insuretech and Fintech startups, Agile Bridge delivers the crucial system connectivity, allowing for the complete concentration on the customer engagement design, without having to worry about building the underlying communication platform, which would be expensive and time-consuming to build from scratch.

Understanding how disruption occurs

Disruption occurs when an established Fintech or Insuretech business, confident in its marketplace, seeks quite naturally, to raise the standards of its products or services over time. They concentrate upon targeting their two most valuable groups, their bread-and-butter mainstream customers and their most profitable high-end clientele.

This gradual raising of performance and quality over time, inevitably leads to the established player paying little or no attention to the lowest tiers of their marketplace. Unprofitable customers are abandoned or overtly surcharged to compensate for the expense of servicing them. New, less profitable markets are ignored, where those customers are deemed unprofitable.

The true Fintech or Insuretech disruptor exploits this by recognising those unfulfilled, unserved customer groups. By adopting a much lower product performance trajectory and by utilising technology enablers such as Endava, the disruptor can ably target those customers. They can do so without having to match the qualitive or performance standards of the established business.

Once embedded and the lowest tier customers secured, the Fintech disruptor can furtively move upmarket to challenge the established players, gradually taking market share and profit from them.

Meet the disruptors

Insuretech disruptors such as Wrisk or Lemonade vigorously attack lower tier customers. By offering accessible pay-as-you go policies, they appeal to those customers looking for lower cost bespoke cover, or those who do not feel that traditional insurance products meet their needs.

Lemonade’s app and subscription model allows customers to buy insurance cover in the same way they pay for Netflix, turning insurance into a digital service that customers, particularly younger tech-savvy consumers, find attractive.

Wrisk innovates by utilising a hefty dose of gamification to engage directly with their customers. An instant assessment of risk is transparently displayed to the customer, allowing them to understand why their premium is higher than their friend, who might live in an area with a lower crime rate. The customer can then score points by mitigating their risks and thereby lower their premium.

Other disruptors may seek to exploit untapped new markets or seek to access the marketplace in new ways. Buzzmove is attempting to do just that. Launching in November, Buzzmove will supplement their core removals business with a home insurance product. Once the customer has digitally inventoried their possessions for the purposes of moving to a new house, they may use that list to obtain a quote for home cover.

What unifies these disruptors is the use of technology as a key success factor.

Identifying the disruptor

• The Insuretech disruptor will target the lower tier customers which are either unprofitable to service or fall beneath your product performance level. Concentrate your market research there.
• The disruptor will employ new technologies. Constantly analyse technological developments, even those which appear irrelevant or are utilised outside of your marketplace. As a technology specialist, Endava are familiar with requests from disruptors and established businesses alike to consult on technological trends, technical breakthroughs and most importantly, how they can be successfully employed.
• Watch all new Fintech entrants carefully, even those which appear inconsequential or those which target customers you consider unprofitable. Business intelligence is crucial here.

How to counter the disruptor

These are the big questions; is it possible for established players to disrupt the disruptor? How can Agile Bridge from Endava bring an invaluable competitive edge?

When launching a response from their existing cost-base, the established player will have to either cut deeply to effectively compete, or risk alienating existing high-end customers by going ‘down market’, or even appearing to do so.

The Fintech disruptor thinks you are a dinosaur waiting for a meteor to strike. To truly disrupt the disruptor, you must accept that you are a dinosaur, but not the cold blooded, slow-moving kind. You must become a Raptor.

The Raptor adopts the same aggressive posture as the disruptor and earnestly accepts the same constraints. The team should be small, the finance constrained, the leadership hungry to succeed.

The Raptor understands that developing all the technology they require from scratch is cost and time prohibitive. Endava is often employed to provide technology solutions as primary partner. Their core technology; Agile Bridge, provides for the robust implementation of core system connectivity and digital data management functionality. By utilising such an approach, the Raptor can train a laser focus on customer experience and in bringing their new product or service to market.

Endava can also provide training and consultancy services. In today’s rapidly changing technology landscape, advice from partners can be just as crucial as the technology they provide.

The product must be affordable and accessible to the lowest tiers in your marketplace. Create uniqueness to differentiate yourselves and find new ways to reach your customers. The Raptor should bring a fresh identity and customer-centric brand to the marketplace.

Then the Raptor can fully emerge, ready to face and beat the disruptor at their own game.