Property & Casualty Insurance (or P&C) has long been a sleepy category that has historically made its profits by helping customers protect valued objects against the unforeseen. To adapt to today’s rapidly evolving, consumer-centric culture, and increasingly experience-driven economy, insurers need to continually revisit their business models and value propositions as they move into a new era.
P&C growth opportunities would seem deeply connected to the proliferation of interconnected devices, autonomous vehicles and other technologies, and their adoption by the mobile-centric Millenials (estimated at 92M) entering the market. They crave new, tech-based solutions that provide the best-possible experience, often supported by new or evolved business models (see Airbnb, Uber). That’s a problem for insurers who by and large struggle to innovate and are hamstrung by legacy technology and operational/regulatory constraints — perceived or otherwise.
As a group, it’s unfair to paint Millennials with one broad brush, however there are some “truths” we can all agree to. First, as a generation they are graduating with unprecedented debt. The cost of college has increased 1,120% over the past 30 years (that’s almost 12-fold!) and in 2016 students graduated with an estimated average $37,172 in debt. For non-college millennials, the situation is equally stark. The median income has dipped to levels not seen since the 1990’s, while the cost of living has increased at a steady two-to-three percent. In short, this cohort has less discretionary income than previous generations and likely is much more cost conscious as a result.
This spells bad news for insurance companies selling products that might be seen as unnecessary or a luxury, and an unsexy one at that. This begs for insurers to supply new “on-demand” protection products that flex the model and underwriting processes to offer consumers the ability to buy discrete coverage (ideally via an app or Alexa!) This “no-waste” model recognizes cost as a factor and delivers an improved model based on that fact.
Trov is a new P&C market entrant worth watching. They are currently only active in the UK, and offer “on demand” insurance for your valuable objects via a mobile-only experience designed for the tech-savvy consumer. Imagine being able to toggle insurance “on” for your camera equipment just before heading out on a trip. This seems more congruent with today’s consumer needs.
For P&C companies, if the value proposition of protecting your beloved stuff from loss is at the heart of the business, it’s crucial P&C players gain deep and contemporary understanding of how these possessions fit within the lives of the modern consumer. We at Mad*Pow theorize that the objects we own serve a larger experience purpose and that experience carries much more meaning. In other words, while you may love your bike, you looooooove your bike rides. Designing new digital products based on deep understanding of these psychological factors, will open new paths to growth and potentially surface entirely new product ideas.
If you want to attract the large market of young buyers, this isn’t optional. Forget everything you know about insurance and design on.