The Future of Insurance

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Tuesday 21st August

Reece Frazier

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Technology is allowing us to reimagine products, services and even lifestyles that we once took for granted. Think about what happened when financial transactions like banking, share trading, airline ticketing, vehicle registration and road tolls migrated to the internet 15 years ago. They didn’t necessarily become cheaper on the internet, but they became more convenient for the customer and the vendor.

And then along came the smartphone which quickly became our preferred way to transact. Mobile-first’ platforms were built on purpose-built digital platforms, and this meant services became cheaper and better for the users. At Picnic we’re bringing together mobile technology and a people-first philosophy, to build the Future of Insurance. In this future, we start with what the customer needs from insurance: personal insurance policies that are simple, transparent and fair; fast claims management; policies with low excesses and few exclusions; and low-cost premiums.

Then we build a ‘mobile-first’ insurance platform that runs on a smartphone (or a laptop), ensuring that the products you want are accessible and convenient. Our platform is leading-edge, Silicon Valley technology, specifically designed to run a mobile-first insurance business on smartphones. Some of the components are proprietary applications and others are the best applications available from respected developers. The core of our platform is designed in Australia and the United States, and built by specialist teams in Australia and around the world. It was developed so even people who don’t transact on smartphones, will happily be insured by Picnic on a phone.

Yes, we’re also on your PC and we have call centres. But our mobile platform is so efficient that it keeps the costs down and the convenience high, and even tethered consumers are now using our mobile app.

Our mobile platform is also ‘future-proofed’. It’s been built so it easily integrates with cost-lowering technologies such as the Internet of Things, Machine Learning, Artificial Intelligence and quantum computing. Some of these technologies might not be mature enough to use right now, but when they can make a better, cheaper, safer service for our customers, our platform can integrate them.

That’s a fairly solid technology line-up. But the structure in which we operate - an insurance mutual - is not so futuristic. In fact, the mutual is an old idea that went out of fashion in the 1990s. But it’s also the best way to organise an insurance company. Why? Because it’s better for the policy-holders. At the heart of a mutual company is the shared bearing of risk: everyone puts in small amounts of cash each year (the premium) and a few people will claim on the insurance pool when there is a fire, an accident or a theft. Thus, the many insure the few and we all get to share unused surpluses. That’s mutual insurance.

Unlike publicly-listed insurance companies, there are no external shareholders in a mutual, the shareholders are the policy-holders (called Owners). So if the mutual has a good trading period, profits are returned to you - the Owners - via lower premiums and loyalty rebates. The crucial benefit of the mutual is that insurance claims are not seen as a ‘hit’ to shareholders’ profits, because paying claims is what the insurance mutual was set-up to do.

So we’re using modern technology to improve insurance but are also reimagining it as a person-centered organisation. It’s this intersection of technology and people that makes a whole new type of company, built on mutuality. It’s the principles of mutuality rebuilt as a fully licensed, Digital Insurance Collective.

To serve the needs of people, we’re bringing together the power of technology to enable a proven mutual model. It’s the Future of Insurance.