It’s been more than 6 weeks since I wrote the last piece on experimenting on creating a new-age travel insurance product for the modern traveler. I must say, it’s been a journey of discovery and reflecting so far. Much of the foundational work is what I usually go through at startup accelerators and it’s nice to be on the discovery end for a change.
So here are some of the points I attempted to solve?
- What do we stand for?
- What could the product look like?
- Who are we selling to?
- Would the product be something people are willing to pay for? What is the customer value?
- How does an insurer operate?
- What are the current pain points users face with travel insurance?
Of Note: Travel Insurance is a fairly vanilla type of insurance and serves a specific purpose. Since we are re-imagining Travel Insurance on what it could be, rather than what it is. From this I made a concerted effort to make sure to that we start on the right foot and think of simplicity, customer-value and discovering what is possible using today’s technology. I found early on that it’s easy to complicate things. So, I wrote a memo to myself using some quotes that I belief in during early development of a brand and product.
“Simplicity is the ultimate sophistication” — Leonardo Da Vinci
“It takes a lot of hard work to make something simple — Steve Jobs
With that in mind: Let’s dive in.
1. What do we stand for?
This is one of the most important steps that I go through with startups I help. Quite often, a founder will have a valid idea, concept, or even be in the market, yet as they start building/ scaling it, they often missing key fundamentals; most of all… what do we stand for?
An easy way to look at this is through a few exercises before the design or product process begins. These include:
- Product Beliefs — what must we have, and what do we want to avoid.
- Brand Narrative and image — what do we want this to become?
First up is What we stand for? from a product stand point.
The points above represent what the what the product should encapsulate. While these seem generic, it’s always good to write these down as part of the platform.
Brand Narrative and image
For brand narrative and image, I usually attempt to understand how the brand should make users feel and what we want to become. Below is a simple exercise in this. If our brand were x, what would we be? and Why?
I wont go into everyone of those, however some of the highlights include:
If we were a Car, we would be a Volvo. Why? Volvo’s are historically known to be safe, secure. Yet the recent evolution of the brand is becoming more progressive, sporty and innovative. Being safe and secure is a pillar of being an insurer.
If we were a Celebrity, we would be Angelina Jolie. Why? She is famous for being a humanitarian as much as she is an actress. She stands for something that people can identify with and that has a lasting effect on people. We want to become the sustainable travel insurer giving back to the places that users visit.
The rest are fairly vanilla and are based on similar principals.
From these two exercises, it’s clear that we stand for being natural, seamless, safe, secure, progressive and most of all, add unquestionable value to a users travel behavior pre-trip, during and after.
2. What could the product look like?
Travel insurance products today are unsophisticated… we already know this. From research, I found that Travel Insurance today is:
- The red-headed step-child of the insurance sector;
- Mainly paper/ human centric; &
- Mainframe tech stacks built in the late 80’s early 90's.
What could it be, if nothing was created before it. Here are some thoughts:
To consider for the product:
- What should we cover? How do people travel with today? Has it changed over the last decade?
- Insurance is typically a product users don’t trust. How do we build trust?
- Travel Insurance today relies on known where users are going. Could we use geo-location technology to make this seamless? Geo-fencing… could this be used?
- Facebook is full of user travel data.. today, everyone ‘check’s in’ and shares photo’s while traveling — could we use this?
- What are the main reasons for claiming? Is there something missing in the current product suite?
- What’s the likely weather while away? Is it tropical cyclone season? Does this affect a users travel experience?
- Could understanding what airlines, transport or hotels users are using impact our insurance? Do people claim more if they use a specific airline or stay at a specific hotel?
So with all that… how might we tackle this?
Be mobile first
Being mobile-first or native means we can use a host of features including providing on-point notifications based on travel information changing or updating. We could use geo-location technology from the smart phone to understand if the cover matches their movements. We could use Facebook SDK to gather more detail about the user and personalize the experience based on this data. We could do similar things on the web, however the geolocation data matched with common behavior on the device pushes a stronger case for mobile. Better yet, a large portion of us take a smartphone while traveling, so it make sense that we build on that first, not a laptop or PC.
Use a REST API
REST API’s go hand-in-hand with mobile development these days. However when it comes to insurance, much of the understanding and fabric of the products are still evolving. Sure, the API can handle the basic core/ hygiene functions of the app, however I aim to create micro-services connecting to all sorts of meaningful services. If we hooked in Amadeus (travel framework), Smart Traveller (safety platform) and WeatherAPI, we’d get a deep understanding of the user, the locations the user is visiting and what risks will be present during the trip.
Add A.I to continuously automate
Part of being an insurer is to collect the appropriate data, analyze against some business rules and create a price based on the risk. Using AI, we could automate the pricing phase of insurance with up-to-date business rules mashed with real-time data collection of the user, the location data and supplementary data that affects the policy. On the flip-side, we could use AI to power the claims process checking policy data, user data and claim business rules to automate decisions. I estimated around 60 micro-services could be used to validate a claim using AI.
Could chatbots help automate claims processes?
This one I feel is worth the exercise in experimentation. I do feel that chatbots can be useful when the intent is clear and valuable. Some chatbots I’ve seen try to do too much and the user is often overwhelmed or confused with the responses. I think for simple claim processes that don’t have as many variables, chatbots could be used. For more complex claims, like medical claims, we should attempt to blur the line between chatbots and real humans creating a seamless and valuable experience. Easier said than done!
Be relationship centric, not product centric
One angle I think is often missed is what truly matters when building a product to meet the needs of today’s users. User expectations have shifted fundamentally over time. Today, building relationships is where it’s at, so we want to focus on that.
3. Who are we selling to?
Essentially, travelers are the end user. So it should be called out. However 69% of travel insurance is sold through ‘brokers’. Brokers can be airlines, booking sites or travel agents. For this exercise, I’ll be focusing on the digital ones first since we could use REST API’s to integrate seamlessly.
For the current discovery phase, I am concentrating on the travelers first since they are the true end-user. However, digital brokers will likely be required to reach scale, therefore I started to understand what value they received from on-selling travel insurance. In a nutshell, they receive up to 50% commission of the premium (i.e. if the policy costs $102, the digital broker will receive $51 commission). That is a lot of commission… I think it’s worthwhile discovering in the later stage however this could be flipped (iTunes to the music industry?).
4. Would the product be something people are willing to pay for? What is the customer perceived value?
This is the interesting one. Travel insurance often is a free add-on service, so why would people pay to use it? Speaking to a few insurers about this… there is an internal understanding that this is the case, therefore on-going investment in travel insurance development is low. I disagree with this mentality.
When there is value, people are willing to spend money. The case could be made for a range of products today that were free or included at a point in time. Bottled water, food delivery, plastic bags, compressed air, online newspapers, even everyday banking now cost something due to the perceived value.
Even Slack was a free tool for a period of time, until they created enough customer value, mainly through their marketplace of apps and achieving a level of product polish that it was worth paying for.
Customer perceived value
Customer perceived value isn’t a technology, but rather a formula as described above. It’s a good tool to use to understand if your products or services are inline with customer perceived value, against the benefits and cost associated with those benefits.
Imagine if you got travel insurance for free, but:
- Sign up took up to 8 minutes and at the end, you still had to see the fine print to make sure you’ve covered for what matters most.
- Had to wade through up to 10 documents to complete a claim.
- Had to wait up to 12 days to receive money (current industry average*).
- Policy was loaded with fine-print that is built to trip you up (excuse the pun).
- The sign up process was simple, clear, transparent and digital, using today’s technology to streamline the process.
- That what you took on the trip was covered completely. Laptops, phones, snowboards, guitars, you name it.
- That users could actually view their trip in detail and be informed of any risks as they travel. Even check into flights and hotels digitally (where possible).
- That the users policy updated with the user as they progressed through their journey.
- That ~70% of claim process happened digitally, and is personalized to the users travels. Claims should be automated completed within 3 minutes, not 12 days.
- That once a claim was approved, that receiving the funds happened in real-time, not after the 12 days.
- That if the policy completed without a claim, a portion of the premium would be donated to a selected sustainable travel body based on where they user traveled to at the end of year FY.
These are now the goals I’ve set to attempt to hit while building.
A mantra I came up with during this discovery states:
“We know that people seek to achieve a measurable result, and it can be realized. We want our value to be perceived through our commitment to understanding and fulfilling the users desired result, rather than simple selling a solution.”
5. How does an insurer operate?
Today insurers fall into two categories:
- They are a fully-blown insurer, handling underwriting, claims etc. (Allianz, Suncorp, IAG, Lloyds are in this category).
- They are a ‘Cover holder’ which essentially means they are the front-end to the names in point 1. (Real Insurance, Budget-Direct, Huddle fall into this category).
Number #1: Lengthy process to achieve this, expensive to do, and requires a lot of capital.
Number #2: More streamlined, however you need to negotiate a product, pricing model, claims process, operating model, validation of the business is solvent… the list goes on.
Normally, #2 is where most new insurers head towards, however if you want your product to really be customer-centric and to the mantra’s above, you need to negotiate with an insurer. So, from this, I’ve started a conversation with an insurer with the aim to co-build a product that meets the needs of today’s travelers. Normally most insurers take an off-the-shelf product and change the brand name. It’s going to be a lengthy process, however it will be essential to going-live with the intended customer value.
6. What are the current pain points users face with travel insurance?
Throughout the 6-week journey, I’ve spoken to 32 users who have purchased travel insurance and made a claim. Of the 32:
- 12 had a positive experience with travel insurance. Comments included not requiring the insurance, the claim process was handled swiftly and in an acceptable timeframe.
- 8 had a moderate experience with travel insurance. Comments including lengthy yet satisfactory claim experience.
- 10 had a somewhat negative travel insurance experience. Comments included not being paid out fully against the claim, having to provide a range of documentation which was difficult during their trip.
- 2 users had a horrific experience with their travel insurance provider.
Overall, 91% of Australian’s took out travel insurance when they traveled. That is a large stat to say that travel insurance is valued, however most saw it as a necessary evil!
What really shocked me was that some of the feedback when it comes to booking flights with travel insurance. When booking flights, users often wanted to use their platinum credit card ($150 per year) to purchase the flights due to the free insurance. When they booked using a credit card, they were charged 4.0% extra for using the credit card. I actually tried this and attempted to book a flight to Amsterdam. Two people return, it came to $3,788 (with no travel insurance). I selected credit card, which added an extra 4.0% or $151.52, bringing the total to $3,939.
If I booked with my debit card and purchased comprehensive insurance via Allianz or Covermore (avg. $150 as the premium), I’d be at the same amount of $3,939. This would be common user behavior will require some education to change this known path towards travel insurance.
Of note: I’d say that due to the sheer weight of real-time data I’m looking to capture that will drive the risk model and business rules, my expectation is that the premiums would we ~30% less than the incumbents… making our product competitive on pricing, but also, there is power in data. New income streams could improve the income per customer to a high lifetime value.
Next chapter, I’ll go into the actual product discovery, what I’ve designed, delivered, and what’s to come in the development. Thanks for reading.!