Insurance isn’t safe from fintech disruption either. Originally, many insurance companies used similar marketing strategies and primarily competed on price. Now, insurtech startups like Lemonade, Next Insurance, Metromile, and Hippo are shaking up the insurance field with new marketing and branding strategies. They aren’t just price comparison websites that help you choose policies from major insurers. These insurance companies have different business models and use new financial services branding strategies.
Insurance for a Cause
Lemonade is an insurtech that donates left-over money to the causes its customers support. If policy holders submit fewer insurance claims, it’ll have more money available to support political activism. This strategy positions Lemonade as a brand that cares about the political causes that it lists on its website. It also reduces the agency problem in insurance.
Normally, an insurer has an incentive to deny as many claims as possible, even if they’re valid. And the policy holder has an incentive to submit claims even if it expects the insurer to deny them. By including support for political causes in its brand, Lemonade can discourage policy holders from submitting frivolous claims. That also means it’ll have more money to pay out for legitimate claims.
Promoting Customers During the Pandemic
Next Insurance provides insurance for small business owners such as construction contractors. It makes insurance easy for them to purchase and easy for them to understand. But in 2021, lots of small businesses are struggling. So the insurtech posted commercials for several of the contractors who use its services on its webpage. These promotional materials aren’t focused on selling insurance, at least not directly.
They’re written like marketing copy for the individual contractors who use Next Insurance and are designed to drive customers to these businesses through call-to-action language. And the contractors reciprocated by using their construction skills to promote the Next brand. One example of this insurtech marketing strategy is the page for a heavy machinery contractor in Pennsylvania. By creating these promotional pages, Next Insurance is branding itself as an insurance agency that wants to help its clients succeed in business, not just collect premiums from them.
Pay-Per-Use Business Model
Metromile highlights its offer first on its website because its offer is unique. It charges its customers by the mile for auto insurance. Car insurance companies usually charge by the month or by the year. While insurers may provide discounts if a driver is less active, these policies are typically not designed to provide coverage for less active drivers. Metromile charges a low base fee for auto insurance plus an additional per-mile fee.
So Metromile offers drivers a way to customize their auto insurance policies to a much greater extent than other insurers. The insurance premium is based on the number of miles each individual actually drives, not a broader category like low-mileage drivers. And thus Metromile brands itself as the insurance company that helps less active drivers pay less for auto insurance.
Insurance for Modern Homes
Hippo is a home insurance provider for smart homes. It provides higher levels of coverage for personal electronics than other insurance providers. Like other insurtechs, Hippo’s positioning itself as more modern than traditional insurance companies, with a more modern pricing model as well. Hippo sets up smart devices in its customers’ homes to monitor metrics like water leaks, carbon dioxide levels, and motion detection.
As a result, the insurtech can predict damage that is likely to result in an insurance claim before it happens. So it can send out its own contractors to fix small problems before they turn into large ones. The policy holder may never experience the disaster that would have led to an insurance claim in the first place. And that’s better for both the policy holder and the insurance company. The downside, of course, is privacy, but installing the smart devices is optional. Hippo does give policy holders a home insurance discount of up to 13 percent for installing smart devices. Hippo’s branding itself as a smart, high-tech insurer that prevents disasters rather than just reimbursing claims.
Insurance Companies That Stand for Something
These insurtechs use attractive color schemes and have sophisticated mobile apps that are easy to use. But these financial services branding initiatives go beyond that. Lemonade is the insurtech that supports its customers’ causes. Next Insurance helps customers find work in tough times. Metromile aligns insurance costs with the need for auto insurance. And Hippo provides smart home insurance that solves problems before they become insurance claims.