Adam Powell - QMetric
InsureTech is the hot new ‘buzz word’ in the insurance space. Young and enthusiastic start-up businesses are popping up all over the industry boasting how they can use tech and big data to improve the insurance offerings for customers. Encouragingly, the InsureTech revolution is forcing insurance specialists to step up their game in terms of customer service and their offerings. Things are certainly changing. No longer can the big old British insurers plod along the same well-trodden path they used to.
The fact is insurers need to embrace InsureTech with open arms. They need to intertwine these new technologies. But the real challenge is to ensure that InsureTech makes a product or service attractive to consumers. There’s no point using tech for tech’s sake. In short, it’s all about creating tailored products, rather than one-size-fits-all.
Customers don’t want the same insurance premium as their neighbour just because they live on the same road, have the same number of bedrooms and are the same age. They need the Saville Row of insurances. It needs to be tailored but at a competitive price.
So what’s happening now is big insurance companies are scrambling around, chomping at the bit to invest in the newest shiniest start-ups to help them drive the innovation they seek. They’re finally seeing these disruptors as an opportunity rather than a threat.
But one player in the market has been building its own underwriting platform, mining big data, crunching millions of data points a second and building self-learning tech systems since before ‘InsureTech’ was even a word. That business is Policy Expert As Policy Expert continues to gain market share in the UK insurance industry, it does so subtly and covertly. It goes against the grain of the typical monolithic insurance companies we’ve become used to.
The business, which describes itself as ‘a tech company that does insurance’, has achieved a compound annual growth rate of over 100% in the last five years and has set its sights on taking on the biggest insurers in the industry. It’s safe to say, the competition is starting to take note.
The business was founded in 2010 by Tony Deacon and Adam Powell. With 50 years of experience between them, the pair have a track record of launching other tech driven insurance start-ups.
They have been at the forefront of an industry moving away from the traditional insurance broker model and where a handful of big brands are dominant, to one where insurance aggregators have fundamentally changed distribution and driven immense competition. That said, in the last few years, the industry has seen a new evolution. An evolution influenced by the term we now know as InsureTech.
Embrace the tech: A tech business that happens to do insurance
Policy Expert didn’t set out to be an ‘InsureTech’, they weren’t riding a ‘FinTech’ wave. They were simply a tech company using the very best data to give people the most suitable and cost effective insurance policies. But how exactly did they do it? Policy Expert, unlike other insurers, built its very own technology from scratch. Back in the day an insurer would take information from a potential customer, ship that information to an underwriter which would then use a pricing manual to calculate your premium.
This was typically generated from your postcode and your age among other variables. The majority of the players in the industry used the same platform, they followed the same process. So why should you do anything different? Well, Policy Expert’s view was simple, they felt the current process was broken, or at best inefficient.
In 2011 Policy Expert removed a step from that process. Why go to a middleman when you can build your own system based on a big data pool?
By owning the process end to end, Policy Expert could streamline the entire process. This control resulted in a far more adaptable system; they could use APIs, algorithms and artificial intelligence to generate the most accurate and realistic price for customers. But what’s best about this approach is that it makes the process more efficient. Which means it’s cheaper. And because it’s cheaper, Policy Expert could pass on those cost savings to its customers. It is a win win situation. Not only are customers getting a more accurate risk analysis and price, they’re also getting it cheaper.
While the tech sits at the heart of the business, Powell believes there are five other key elements that make Policy Expert the leader it is. “Tech drives everything we do, but if your relationship with the customer isn’t top notch, then you’re in trouble.
There are five values at Policy Expert that we always live up to: Please the customer, disrupt the norm, reward loyalty, communicate seamlessly and always, always look forward.”
Please the customer: The original Policy Experts
Policy Expert has a lot to be proud of. Since it sold its first policy in May 2011 it has been the UK’s fastest growing Home Insurance provider – now insuring over 350,000 homes across the UK. While it also boasts offerings in the car, travel and soon the small business sector, buildings and contents cover has been its bread and butter.
While growing fast is great for a business, it doesn’t always mean that the business has happy customers. But that’s no problem for customer focused Policy Expert. Its customers voted them the UK’s number one Home Insurance provider on ReviewCentre.com. A title that the business earned in 2013 and has kept ever since.
“We wish we could say there’s a magic formula to our success, but the reality is our achievements revolve around our customer centric approach” says Operations Director and Co-Founder, Adam Powell. “Customers are at the heart of everything we do and any decisions we make have to pass our ‘customer first’ test. That was at the heart of the proposition when the two of us began our venture seven years ago”.
“We have a growing team of over 150 experts in our Milton Keynes contact centre. They’re there to help customers find the best deal on their home insurance as well as helping them with any queries or concerns” says Powell.
But it’s not just about the best service when buying an insurance policy - it’s about offering best in class service when making a claim too. Policy Expert spends over £30m every single year repairing its customers’ houses or replacing their possessions. In addition, all its building work - unlike many other insurers - is guaranteed for two years. Powell adds “Being frank, the only reason you take out insurance in the first place is to cover yourself should the worst happen.”
And when that does, you need to know things will be dealt with effectively and efficiently. Many other insurers shy away from talking about their claims process, but not us. We’re proud of it. We believe our claims process is the best on the market. We work fast, we guarantee our work and ultimately we put people’s lives back together. Our response to the Carlisle floods is a testament to our dedication to our customers and the speed at which we can react in crisis”.
Disrupt the norm: the obsession with price is unhealthy
From inception, the founders at Policy Expert knew that the process for buying insurance had broken - customers were getting a poor deal. New and exciting aggregators, promoted by their ever morcharacterful marketing campaigns, continue to dominate the way consumers make their insurance purchase decision. It’s a seemingly simple yet very effective process. Go online, pop in some details, quickly compare a selection of quotes, chose the cheapest one and bobs your uncle, you’re insured.
But is that really the best way to buy a product that protects some of the most precious items in your life? Powell questions this new norm; “The process of buying insurance has lost the human touch. It used to be that you would sit with an insurance broker, discuss exactly what you needed from your insurance and you would get a tailored product that’s right for your unique circumstances”. Powell is one of the media’s go to commentators in the insurance market and is very clear about his view on price vs quality. He adds “Whenever I speak to the media I always say that if the only thing you remember about your insurance is the price, the chances are you might not have the right product for you.”
This notion that price is the only influencer when buying insurance, drove Policy Expert to create a business that helps people not only get a competitively priced policy, but more importantly the RIGHT policy. Powell adds “People have become overly influenced by prices or offers and fail to appreciate the quality of the product they’re buying. This needed to change. Unless we offer them the very best product for their specific circumstances, the very best service and the very best outcomes, they won’t come back to us. It’s as simple as that”.
Based in Milton Keynes, the business currently fields thousands of calls a day in its call centre Again, this was an important and deliberate move by the team; UK based call centres were essential. It’s safe to say that every single person in that call centre is a policy expert – in fact, there’s even a learning and development department to ensure the whole employee base are experts.
In recent years the HR team has totally redesigned its on-boarding programme to ensure that new starters have a best in class on-boarding. A key focus of this has been to use blended learning to allow them to have time in the classroom, on the job learning and time with their teams so not only are they learning, they are also socially orientated into their teams.
To help improve the quality of every single staff member’s product knowledge the team recently embedded an e-learning platform. This means the HR team at Policy Expert can actively assess and improve staff knowledge on various subjects at any time.
Whether that is a new product feature or an update to an FCA paper on renewals transparency, the team truly are experts. Results from these tests enable the business to understand knowledge gaps and specifically target these through performance management process.
“Our people are our business” says Powell. “And if we want to live by our name, we need to ensure our business, from top to bottom, is full of experts. That way, we know that our customers can ask any questions about their policy and can be assured that they’ll get the answers they need”.
Reward loyalty: Loyalty is king
Policy Expert also acknowledged that ensuring customer loyalty was going to be a key driver behind the success of their business. “The insurance industry won’t like me for saying this, but the majority of players out there are more concerned with driving ever higher margins than creating satisfied customers. They only seem to value the new customers and penalise existing ones.”
Figures from Consumer Intelligence show that home insurance premiums rose 1.8% year on year to January 2017, with another rise in June 2017 set to push up prices further. As recently as October 2015, insurance premium tax was charged at a rate of 6% but this will have doubled by this summer when it will rise to 12%. This will inevitably have a big impact on customers premiums and businesses need to acknowledge this and do everything they can to safeguard their customers.
“Premiums rarely remain the same year on year and customers know this” says Powell. “We know that buying insurance is a grudge purchase. And what makes it worse is that many people see their premiums increase every year. That’s not right and it needed to change”. Policy Expert is the first insurer in the UK to offer its customers a two year fixed rate on premiums to safeguard its customers against year on year premium rises. “You can fix your mortgage rate, you can fix your utility bill, so why shouldn’t you be able to fix your insurance premium?” says Powell.
He adds: “This was always a goal of ours from the outset. Not only can we give our customers the peace of mind that their premiums won’t rise, but we also encourage loyalty. We value our customers and we want them to stay with us. By listening to them and giving them products they want, like this, they decide to stay with us year on year”. Policy Expert is currently working on developing a fixed premium for up to three years which it hopes to roll out to its customers in the near future.
Communicate seamlessly: Always talk the talk
“Let’s not beat around the bush; insurance is boring to most people” says Powell. In 2015, the business took it upon itself to overhaul its communications and the way it spoke to its customers. It already knew that insurance was a grudge purchase and people didn’t enjoy the process of buying insurance, so why make the process even more arduous by bamboozling its customers with insurance jargon in its contracts. So the business decided to make things simple and easier for its customer. Policy Expert now boasts a Crystal Mark from the Plain English Campaign which is a seal of approval for the clarity of a business’s documentation. So whether its text, design, print quality, usefulness or even sentence length, customers know that Policy Expert won’t drown them in complicated and convoluted insurance jargon. “This was really important to us” say Powell “And the Crystal Mark for Plain English is now a bench mark that we aim to exceed. While we acknowledge that we are the experts on policies, we wouldn’t be doing our job right if our customers didn’t 100% understand what they were buying and that is why we do this”.
Always look forward: Never stop pushing the boundaries
Despite the UK’s decision to leave the European Union, a recent report by Accenture reveals that investment in InsureTech has doubled in the past year. Once market confidence recovers, InsureTech will be back on its way to an estimated growth of £253 billion by 2021. This is great for the industry as evolution is key. But it is paramount to remember that the typical insurer is over 300 years old whereas the typical InsureTech is less than 300 days old.
Powell suggests insurers need to remain current like the InsureTechs. “When we started, we could have followed suit like that rest of the crowd. We could have tried to be a comparison site or an online only broker. But we’d have no USP. That’s why we developed our own big data systems. That is what has put us ahead of other challengers in the market. But what’s really exciting now is that tech from outside the insurance world, whether it be the newest security systems or an AI bot, is now changing the way we can quote on a premium”.
Accenture’s Technology Vision for Insurance 2016 revealed that 31 percent of insurers now plan to work with startups from outside of the insurance industry. This is where Policy Expert sees some of the most exciting changes.
Powell said: “We knew from the start that by understanding big data, as in understanding every aspect of our customer, we could offer the most accurate risk analysis and pricing. With the rise of big data, we’re only going to know more about our customers and that will no doubt help us to reduce premiums even more”.
For instance, look at NEST, the home gadget developer. The NEST Learning Thermostat is a smart thermostat developed by Nest Labs. The device is an electronic, programmable and self-learning Wi-Fi-enabled thermostat that optimises heating and cooling of homes. They have also just launched The Nest Cam IQ that automatically recognizes an intruder, zooms in and then follows him or her automatically.
“At present, insurers in the UK do offer discounts on policies for standard security measures such as home alarms and security lights. New tech like NEST, which allows people to manage their home security via an app, will soon come into play too. Much like we learn more about our customers via big data, knowing that they have cutting edge tech to safeguard their home will help us tailor and cheapen their premiums further. It won’t be long before policy holders can receive a reduction in insurance premium by having these high tech security measures in place” says Powell.
The future is bright
With its phenomenal growth since 2011, insuring over 350,000 homes, Policy Expert sets itself the challenging goal of offering insurance to over one million customers in the next five years. It’s a big task, but for a business that already has an established self-learning underwriting system in house, the future is looking bright.
Powell says: “We knew from the outset that by doing things in house, we could not only offer a more tailored proposition, but a more competitive one. The savings we make are passed straight onto our customers. And that was just the start of our innovations. We’re really excited about our two year fixed premiums and intend to evolve this further in the years to come. Customers want that peace of mind and our job is to give our customers exactly what they want. And we’ll just keep evolving our business model as our customers evolve.”
He concludes: “It’s a real honour to be recognised as the winner of Insurance Company of the Year. It’s a testament to all the hard work the 250 strong Policy Expert team puts in day in day out. It’s also fantastic that our CEO, Tony Deacon, has picked up the accolade of Insurance Gamechanger of the Year. Without his vision, expertise and belief in the use of technology to offer the very best service to our customers, Policy Expert wouldn’t exist, and certainly wouldn’t be the success story it is today”.
Photographed: Adam Powell, Co-Founder, QMetric