All business is program business; this is something that Novarica CEO Matthew Josefowicz has frequently said. Program business, i.e., tailoring coverages to specific and sometimes niche market segments, is gaining steam in commercial lines (and more specifically small business insurance).
Targeting these smaller market segments is the bread and butter of many startups. New entrants have brought the Silicon Valley/startup approach to insurance, focusing on consumer need and filling gaps that more established carriers have often overlooked.
Some InsureTechs are going after microbusinesses and freelance workers. Next Insurance (though arguably no longer a startup), for example, offers liability coverage for professionals like personal trainers, photographers, estheticians, etc. Others have taken the idea of niche coverage one step further and allow insurers to build bespoke coverages. Take Slice, for instance, which recently began offering cloud enablement services to help insurers build custom, on-demand insurance products (this in addition to its preexisting homeshare and rideshare coverage). Assurely is another example: The company builds new products based on market need and can act as an MGA on behalf of a carrier. It also offers the ability to “request a new product,” and recent coverages developed include crowdfunding and cryptocurrency insurance.
Will program business eventually give way to individualized, custom coverage? Probably not anytime soon, but startups are redrawing and blurring the line between the two in the short term.
The lessons that InsureTech startups bring around rapid product development and bespoke, niche coverages can be valuable to long-term customer engagement strategies for many insurers. What’s more, startups can provide an outlet for insurers to reach new markets and outsource custom product development.
Novarica’s recent report, InsureTech for Insurers: 200 Startup Profiles, provides startup profiles and an overview of trends and lessons insurers can learn in areas like product development.
Add new comment