By FintechOS - August 23, 2023
Futureproofing Insurance Legacy Systems with Fintech Enablement
The concept of futureproofing has become synonymous with innovation. Learn how you can innovate and modernize on insurance legacy systems
The pet insurance market could be a USD 16.8 billion opportunity for insurers, according to Allied Market Research, but consumers are feeling alienated and unseen by generic, one-size-fits-all pet cover that doesn’t fit their needs.
Meanwhile, fintech innovators like Revolut and Lassie AB are winning customer trust and earning share of wallet. Whether you’re already offering traditional pet insurance or you’re breaking into the market, how can you compete with pet insurtech?
To win over pet insurance customers, you need to offer them tailored, hyper-personalized cover with all the convenience and ease-of-use that digital insurtech can bring. Yet, most of all, you have to show them you care about their pet as much as they do.
According to a well-known 2015 Harris Poll survey, 95% of pet owners consider their pets to be part of their family. Pet ownership has always been a personal matter, but it’s only becoming more so.
With people locked down at home over the last few years, pet ownership has surged. For example, the PFMA estimates that 3.2 million new pets were acquired by UK households from 2020 to 2021. Not to mention, pet owners are spending all day at home with their pets.
According to Salesforce research, 76% of consumers expect firms to understand their needs, while 84% agree the key to winning their business is being treated like a person. Equally, Research and Markets found most pet insurance customers were more concerned about acquiring the right level of cover than the price.
As such, you can imagine a pet owner’s disappointment when the cover they’re quoted for is based on a set of generic data points when they’re looking for the kind of AI-driven hyper-personalization they receive from tech companies like Google. At least, they want to feel like their pet is a priority for the insurer, not just a product.
Malin Posern, partner at Passion Capital, told Sifted:
“Pet insurance is an area where incumbent insurers have struggled, in part because the structure of claims is very different from other markets. Most claims happen in the first year of a pet’s life. It is also a market that lacks precise information — for example, many incumbent insurers will lump mixed-breed dogs into one single category, although the health needs of different breed mixes might be different.
Clearly the above gap presents an opportunity for UK insurers, and we’re seeing this trend all around the world. Indeed, Global Market Insights predict pet insurance market revenue will exceed USD 10 billion by 2025, seeing a 12% increase, and Allied Market Research puts the value of pet insurance at USD 16.8 billion by 2030.
What’s more, consumers who already have pet insurance are more than willing to switch to a new provider. According to the Scratch and Patch Pet Insurance Survey 2020, 53% of pet insurance customers feel trapped with their current insurer, and 78% are open to changing provider. Clearly, there is market share up for grabs.
This is why even the UK’s biggest fintech unicorn Revolut recently announced its entry into the pet insurance space. Others are sure to follow soon.
This hasn’t gone unnoticed by investors either. Sifted research shows European investment in pet insurance start-ups surged from just EUR 20.5 million in 2019 to EUR 129 million in 2020, and more than doubled to EUR 328 million in 2021.
With that level of capital available to pet insurtech start-ups, it’s clear that innovative insurtechs with tailored digital offerings are coming to steal market share from established insurers that have fallen behind the times by offering generic cover for broad categories of pets, if any at all.
Allied Market Research sees both a huge market in Europe and the USA, but also huge potential in Asia:
“By region, the global pet insurance market across Europe, followed by North America, held the largest share in 2020, accounting for nearly two-fifths of the market, due to shift in trend from pet owners to pet parents and rise in social acceptance of pets across the region. However, the market across Asia-Pacific is anticipated to showcase the highest CAGR of 18.4% during the forecast period, owing to rise in pet adoption and surge in awareness about pet insurance in the region.”
This makes it evident that there is a huge opportunity for pet insurance across the global market. Yet, that theoretical potential is just an attractive prospect for the future. The immediate danger, however, is that innovative insurtechs are already staking their claim on this space.
Take Swedish pet insurtech Lassie AB, which recently raised EUR 2.34 million in seed money, led by Wolt-investor Inventure with participation from Passion Capital. The company won this interest with two USPs:
As the headline on Lassie AB’s website proclaims:
When consumers first register with Lassie AB, they fill in the details of their pet, from their name and gender to their breed and whether they’ve been neutered. All of this information is used to calculate a tailored quote for pet cover in seconds.
A mobile app will then provide tailored pet care advice and articles to help customers look after their pet. Engaging with those articles will accumulate points for the customer that can be used as a discount on their premiums. Points can also be earned for completing quizzes about the way customers are caring for their pets.
Lassie claims that leveraging this customer data to tailor their premiums to their customers allows them to charge 25% less than traditional insurers. As a result, Lassie AB is currently earning USD 329,000 pa in revenue within its second year of operation.
Lassie may still be a small player in the market, but offering customized, personal insurance to their customers is driving an astronomical rise in a very short period of time, and garnering clear interest from major European investors.
If an established pet insurer could offer a similar experience to their customers as an established presence, the sky-rocketing pet insurance market could be theirs for the taking.
It’s clear that what customers are looking for is a tailored, customized experience that allows them to offer the kind of personal care through insurance to their pet that they offer them in person.
To do this, you need to offer them something intimate and emotionally engaging. Something as simple as their pet’s picture on their account can make cover feel more friendly and better connect with the feelings they have for their pet. This is a family matter, after all.
From there, you can assure reduced premiums and comprehensive cover, so the insurance is affordable and valuable in the case of a claim. That’s the only way to win over uninsured pet owners and claim the low-hanging fruit of the market.
Our mission at FintechOS is to empower digital innovation teams to modernize their firm’s digital insurance products and customer experiences rapidly. We do this by removing the dependencies, costs, and delays associated with a traditional approach to digital transformation.
The FintechOS platform comes with Accelerators, ready-to-launch front-end customer journeys connected to a powerful insurance product and servicing engine that can be tailored and configured using a low-code/no-code interface, and rolled out to market immediately.
As a brand-new option for our Version 22 release, we’ve developed a pet insurance Accelerator product that’s included in the price of the platform. Implement the FintechOS platform in your software architecture and you’ll be immediately able to configure and launch your own, tailored digital pet insurance product in days, rather than months.
Our pet insurance Accelerator provides an insurance onboarding journey that logs all the details of your customer’s pet, including a photo. The Accelerator then uses state-of-the-art AI software to automatically detect the breed of your customer’s pet. It then consults your systems to generate a personal quote for pet insurance cover based on the information provided.
Best of all, our Accelerator allows your customers to take out different policies for each of their pets and then link their policies together under one account that can be managed in a single portal or app. This even offers the opportunity to cross-sell and integrate with other lines of business.
To see a full demo of our new pet insurance Accelerator and discuss what it can do for your business, book a meeting with us now.