Many articles address macro-trends that can affect the user experience (UX) in the insurtech sector. But how do insurances themselves plan to leverage these trends? And how much of the current innovation will translate into real benefit for the users?

In this article I share my experience of the last years to analyse the current trends in the insurtech sector and discuss what these trends mean for users and for companies that want to innovate in the industry.


Starting from knowing customers better

The problem most frequently associated with user experience in the insurtech sector is that insurance it’s boring. That’s not the main one.The main problem for insurance companies is that they struggle to know their users well, because they do not have frequent interaction with them.


Where insurances differ from banks

In my previous experience I once talked to an executive of one of the largest Dutch insurances who said: “our biggest problem is that we only talk to users when they file for damages. This is on average once every 4 years and it’s not a pleasant memory for them.”

User experience in fintech is at a different point than in insurtech. Banks have a more frequent interaction with users (when was the last time you checked your account balance?). This offers a more favourable starting point in the conversation with users. Banks have to improve how they do it, insurances have to start from scratch. 


How far can personalisation go?

Another user experience trend which is often discussed in the insurtech sector is that the industry will go towards hyper-personalisation. But to what extent is this trend desirable? Personally, I see it is desirable to have a better personalised experience when it comes to the user journey and to the interface. But I don’t see it as desirable personalisation for business models and pricing. The ethical implications can be worrying.


An example from the airline industry

A great example on personalisation of business models comes from the airplane industry. While economists say that it’s logical that fatter people should pay extra for their fare (and those angry travellers who are charged for heavy hand luggage may agree), many doubt that this solution is ethically desirable.

Without entering into the debate on the point, my opinion is that insurers, who are now doing their best to improve their UX and brand themselves as consumer-centric brands will probably want to stay out of the debate too. 


What the solution of a.s.r. Vitality can teach

A brilliant way of addressing the hyper-personalisation of user experience is the solution designed by a.s.r. Vitality. This (paid) programme works in connection with fitness apps (Garmin, FitBit etc.) and rewards users that engage in sportive activity.

What is great about this solution is that it rewards healthy behaviours, without discriminating against unhealthy ones and without discriminating on the basis of the outcome.

But the line can be thin. Would you allow your insurance company to have access to the details of your grocery list to reward you if you don’t buy cigarettes or processed food? For many this may be controversial.


The role of trust in the insurance sector is even higher than in banking

This paper from 2020 from the Dutch Central Bank (DNB) shows that while the trust that consumers have towards insurance companies and banks is similar, consumers are much less likely to tolerate a break of trust from an insurance company. Check the graph below.




This sentiment poses an ever bigger challenge to insurances than to banks, because the margin to make a mistake while experimenting with a different user experience is slimmer. However, this doesn’t mean insurances should not innovate. Quite the opposite. This situation clarifies that innovating in a true user-centric way is even more important for the insurance sector than for the banking one. It is so because the scrutiny of users is higher. 

However, the effort for user-centric innovation is also likely to be rewarded. According to Capgemini, 8 in 10 users are willing to pay a premium for better user experience.


The bottom line

There are large margins to be gained from better user experience in the insurtech sector by leveraging the existing trends of personalisation and simplification.

The challenge for insurance companies is that many of these trends are new to them. Insurance companies have an historically low rate of users’ knowledge, but they’re trying to fill the gap quickly and this goes in the right direction.

The other pain point is that consumers are more likely to question the trustworthiness of their insurance in case of a problem. The good news is that they’re also more willing to pay a higher price for a better user experience and a better service. This creates great possibilities for true user-centric innovation.