“Insurtech” developments are big news even if the tone has changed from being disrupting the industry to enabling change for partners which in most cases means traditional insurers.
It can be hard to keep up so the objective of the “Insurtech Pulse” is to focus on one specific topic .
We will cover SME, Life, Auto, Homeowners and even cross policy topics such as customer service (bots, chat) and millennial marketing. If you want to receive regular updates from The Insurtech Pulse – register at the bottom the this page.
For this issue, we consider renter’s insurance – a policy that has never been a favorite of local agents with low premiums and a transient customer base. The target customer base includes a high percentage of younger renters that show scant interest in protecting limited possessions often in the mistaken belief that landlord insurance cover losses (and liabilities). Renters insurance is long overdue for a fundamental change to the distribution model.Now many factors are aligning to raise interest in renter’s insurance. The target audience:
- Needs to rent longer – the first home purchase is coming later in life for the millennial.
- Have more expensive possessions not least the growing array of personal electronics vital to today’s lifestyle. • Invest in more life experiences and expect possessions to be protected where-ever they might be.
- Remains transient geographically but constantly connected and easily reachable digitally.
Much of the buzz in 2017 revolved around Lemonade and their assault on the renter’s market with a war chest of over $180 million investment. Lemonade’s key differentiation is to take a flat commission (20%) and passing surplus policy profits to charity. This is a convenient stick with which to beat carriers, suggesting that claim payments eat into a carrier’s profits thereby putting the company at odds with the customers. Equally important to Lemonade’s customer is simplicity in quoting, purchase and claims on a mobile device. Lemonade bring Amazon-style “One-Click” thinking to insurance. Lemonade uses machine learning and chatbots to deliver services, handle claims and reduce paperwork. While it might be counter intuitive to suggest a bot is friendlier than an agent, this is the perception Lemonade is counting on. With its investment, Lemonade can afford to play the long game and drive price expectations down much as GEICO and Progressive were able to do for auto insurance. According to the National Association of Insurance Commissioners, renters insurance costs an average of $188 a year, or about $16 a month whereas Lemonade’s top line price is $5 per month. Visit Lemonade
Lemonade is also rethinking distribution as part of making rental insurance easy to buy. As an example, Lemonade partnered with Roomi, a peer-to-peer marketplace for room rentals, sublets and roommates that since its launch in 2015 signed up 1.1 million users. When someone registers on Roomi’s app, they are offered a one-click option to add Lemonade renter’s insurance. Read about Lemonade’s partnership with Roomi
Lemonade is not alone in rethinking the channel for renter’s insurance and with ever increasing availability of APIs, this allows integration into broader systems. TenantCloud provides software to handle rental accounting and has added the capability for landlords not only to insist on renter’s insurance but to provide an easy way to buy directly on the app. Renters that choose not to have adequate insurance for liabilities and negligence are a growing problem for landlords. TenantCloud partnered with Assurant. Visit TenantCloud
Assurant also partnered with property management platform provider Cozy. Cozy offers “affordable, comprehensive coverage” available in minutes and instantly verifiable by landlords. Cozy Renters Insurance
Staying with Assurant, Toronto-based Naborly is backed by Assurant Growth Investing to build AI-based tenant screening. Naborly offers unlimited free tenant screening, credit reports, and criminal background checks to tenants, landlords, and property managers. And to pay for all that screening, Renter’s Insurance is offered which it describes as “Plans designed for renters, by renters.” Visit Naborly
GEICO is not new to renter’s insurance but to streamline the process and make it easier, a “friendly” bot called Kate has taken center stage. GEICO sells renter’s insurance but its policies are underwritten by American Bankers Insurance Company of Florida, which of course is part of the Assurant group. Visit GEICO’s Kate
LYND is a real estate company with 20,000 units under its management and has partnered with West Coast insurtech Jetty to provide lower move-in costs and cash demands. Jetty’s Passport Deposit finances security deposits in exchange for a one-time fee of 17.5%. Passport Deposit is not Jerry’s core product which is renter’s insurance described as “for city life, by city people”. Jetty’s rental insurance also covers property while traveling.
State Farm’s Rhode Island subsidiary HiRoad offers telematic-based auto insurance. The target market, looking at the promotion materials, are millennials and the company is now adding renter’s insurance with a headline annual cost as low as $55. HiRoad’s Rental Policy Still with State Farm, Avail (was Rentalutions) offers landlord software to manage leases, payments and tenant screening and has now partnered with the insurer to offer renter’s insurance for its 60,000 landlord clients.
Travelers created Traverse to target millennials who are “putting off home ownership in favor of renting while investing in life experiences”. The Traverse team claim that traditional insurance no longer meets customers’ needs. Traverse policies are sold online and optimized for mobile devices and renter’s insurance costs between $8 and $32 per month. Policies cover “stuff” (their word) which Traverse describes as — not the furniture and appliances covered by traditional products, but the electronics, equipment, identity theft and “experience” purchases such as vacation delays or home-sharing mishaps.
Allstate is another traditional insurer that is stepping up its renter’s insurance marketing presence and recently uploaded a 24-second video to YouTube. Allstate’s latest campaign centers around a headline “$4 a month” price point but that comes only for customers that also have an auto policy. Allstate’s quote and sign-up process is not (yet) as straight-forward as other firms and require a telephone number for an agent to call back. Allstate Renter’s Insurance
Other providers that have entered the space include in digital broker PolicyGenius who entered in collaboration with Stillwater. And staying with Stillwater, they have partnered with Boston-based MGA Quilt to offer renters insurance at $8 a month and also one of the carriers (along with Chubb, Travelers, and Homesite) providing coverage for Bungalow’s Rental Insurance.