Why do insurtechs feel so emboldened to seize market share from incumbents? Robert Hartley, co-founder and CPO of Dinghy, a company providing flexible cover to freelancers, explains why.
Most of consumers don’t trust their insurers – every survey we’ve seen confirms this finding. Worse, insurtech start-ups are hammering the incumbents. What do they do to win trust?
Robert Hartley, founder and CEO of Dinghy, a company providing flexible cover to freelancers explained why for FintechOS, in our dedicated whitepaper.
According to Dinghy, they are the only insurance company in the Disruption 50 ranking of hottest tech firms.
CAN INCUMBENTS MODERNISE? A VIEW FROM AN INSURTECH
How can Dinghy offer a better service than a traditional insurer?
Excellent question! Legacy tech in big insurers is very limiting. It means you can’t be agile and can’t deploy quickly. The incumbents are spending a fortune trying to modernise. Look at Direct Line. They spent £80m a year, every year, for a decade. That’s almost a billion pounds to redo their tech! And the problem is technology moves so quickly that companies may overhaul but not necessarily get anywhere.
What about the culture of the incumbents?
There are two problems: Hippo and Death By Committee. Hippo means the “highest paid person’s opinion”. The guy at the top wants to be the one making all the decisions. But the highest paid person isn’t necessarily the best person to know what the customer needs.
Product ideas should be driven by customer feedback and the team members who speak with them. However, there are many “hippos” in big companies, who inadvertently block innovation. And Death By Committee is where you have a great idea which can change the world, it goes through endless committees, and by the time it emerges the world has moved on and the person who suggested it is no longer around.
Combine the two and you can see why nothing gets done.
What makes Dinghy so innovative?
We are using a whole new code base. No legacy issues to deal with. This means we can innovate how we want to. Our platform integrates easily with other providers and services. Our whole outlook is lean. We are based on Ruby on Rails so we are very agile.
We do multiple deploys in one day. It’s easy to code, and easy to roll back if anything goes wrong. We are very slick operation. So you can see why we can run rings round the traditional insurers.
Can traditional insurers modernise?
It is possible. I used to work for Simply Business. We used to have an operating system in Java but we couldn’t deploy quickly. My job was to move the product over to Ruby on Rails, which allowed for multiple daily releases. Today Simply Business has the right technology to handle its growth. Customer numbers have risen from 220,000 to half a million. If you want to do that, and do agile development, you need the right technology.
Unfortunately, legacy systems are embedded in old companies. They may be integrated into partner websites, or legacy back end systems,, which comes with additional cost of meeting those needs. It’s hard and expensive to update legacy systems, and the boards have an undertaking to deliver return on investment for shareholders.
To take that gamble they need to be sure it’s going to pay off without disrupting their business flow.
What’s the future for Dinghy?
We’ve just had our best every month. We were founded in January 2017, and just keep growing. We have a partnership with Allianz. We’ll stay agile, so we can respond to our customers’ needs. and keep disrupting the industry.
This interview is part of a series of FintechOS articles on the insurance industry. FintechOS has talked to leading companies from incumbents and start-ups, to accelerators and consultants, to get to the heart of the question that is keeping the industry busy: why is there a crisis of trust in insurance? For more findings on insurance, ➡️download our whitepaper: https://bit.ly/34slCM9.
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