Banking Review

Insurance 2.0

In the UK and US, car insurance is the most frequently purchased online financial services product. In Australia, it remains credit cards. Uptake of online car insurance is attributed to the price war that resulted from the proliferation of insurance aggregators in both overseas markets.

Australia has not seen the rise of major aggregators although RateCity is in the game, the large insurers – NRMA, Suncorp, GIO, AAMI, QBE, Allianz – are in a position where they have not needed to join such a model to drive new business. Indeed Suncorp owns so many brands after the merger with Promina that they are in a unique position to offer services at all levels of the market. However it is new market entrants that are offering some unique online features, services and pricing models that may cause upset to the entrenched market players.

Budget Direct and its green brand, IBuyEco have made serious in roads into the Australia market with their simple message that they don’t insure bad drivers, thus it costs you less. Real Insurance offers it Pay As You Drive offering online. Pay as you drive policies has proven to be successful in the UK. Real Insurance is renowned for its 10 per cent cash back offer for no claims.

Suncorp owned online only brand Bingle has an interesting interface: all green and very large, simple fonts. Originally launched under-the radar, Bingle now promotes that it is underwritten by AAMI on the homepage, no doubt to instill customer confidence in the new brand.

New player in the market is Youi, the self described ‘Insurance 2.0’ player. Youi is underwritten by FirstRand STI International, part of the FirstRand Limited Group of companies. FirstRand is one of South Africa’s largest integrated financial services providers and operates in Africa, the US, the UK, South America as well as Australia and New Zealand.

Youi has launched with advertising demonstrating that Youi ask the questions where other insurers assume the answer; namely around where and how your car is parked. The campaign has started to be discussed on Twitter so it is indeed reaching the web 2.0 audience.

Like Bingle, Youi is an online brand operated by a large player in the market. It is these new, online brands that are agile and quick to embrace the opportunities that online can offer.

Take a casual stroll back through time to 1999 and re-read The Cluetrain Manifesto; where web 2.0 was just a theory. Of the 95 theses presented, the second point hits home with Youi:

“Markets consist of human beings, not demographic sectors.”

Youi has managed to embody this thesis into its advertising, product structure and online offering. To reinforce this they have cleverly used information provided in the quoting process to personalise messages to the customer.

Some insurance providers are embracing web 2.0 technologies to engage with their customers. Youi has not adopted these technologies but it has still managed to make its approach to the online channel a clear point of differentiation.

Their quoting process, while longer than Bingle, is well designed and provides a customer experience that is unique thanks to its personalised messages. While from a customer experience perspective minimum questions may appear better, for accuracy of the quote and ultimately the premium paid, more precise questions yield a better result.

Youi appears to have found that balance between not asking too many questions and still getting enough information; all without compromising customer experience.

It is the nimble, online players like Youi that will be giving the larger, dominant insurers something to contemplate.