A traditional insurance-customer relationship is highly transactional: The consumer buys an asset, such as a car or home, then purchases a policy to cover that asset, and then pays a bill every cycle to keep that asset insured. The primary interaction is only when something bad happens via a claim.
As a result, the insurance industry has created a low-touch, low-engaged consumer base that views their insurance relationship somewhere between doing their taxes and visiting the dentist. According to our 2019 J.D. Power Digital Experience StudySM, 37% of consumers have never spoken with their agent, and one in 10 consumers report they have never interacted with their insurance company at all.
Hippo, an insurtech start-up, has launched with a mission to challenge that status quo. I recently sat down to have a conversation with Hippo’s CEO, Assaf Wand, and Head of Growth Initiatives, Daniel Blanaru. The two explained that they felt insurance companies have earned their poor reputations because they have positioned themselves as only sellers of insurance products, instead of service providers that help consumers manage risk.
“Carriers have done themselves a disservice by treating their customers as a transaction.” said Wand. “Insurance companies are making promises about trust and great service, then when customers interact with them, they get mostly a generic experience.”
Hippo is best known for their smart home water-detection sensors, but their goal is much larger than just flood prevention. By redefining customer engagement through proactive risk mitigation, the company’s leadership believes the insurance industry is ready for a change. It’s an insight that can be seen in Hippo’s latest venture, which engages homeowner policyholders on the upkeep and maintenance of their home throughout the year. For example, homeowners may need to clean fallen leaves out of their gutters, which will ultimately prevent clogging that leads to ice dams and resulting roof leaks in the winter, or an overflowing rain water that can cause foundation problems over the long term.
Perhaps they’re onto something. According to the study, 34% of consumers would be willing to switch to a carrier that offered preventative loss and protection services. Couple that finding with Hippo’s Net Promoter Scores in the low 80s, and customer retention at 93%, it seems clear that Hippo’s consumers are welcoming this new approach to insurance.
Carriers have begun to experiment, currently limited to pushing content-related preventative insights to their customers. State Farm is doing this through its Simple Insights site; Allstate has developed theAllstateBlog, and Progressive developed Progressive Answers. Even GEICO recently launched a distracted driving ad campaign called SmartDogs. However, despite the launch of these initiatives, our research finds that the major carriers are not doing a great job engaging with consumers on preventative advice and guidance.
But therein lies the rub. The typical structure of a modern insurance company is not equipped to handle preventative risk management, and due to costs and potential liability, many have steered clear of such efforts. Acquire a policy, service a policy, and process a claim is the operation mantra of a modern carrier. The opportunity to look more broadly across the enterprise to shift its focus to risk prevention is implausible, and even more difficult in its execution. In the end, it will be consumers that dictate their insurance relationship and what carriers must begin to prioritize.
Are carriers willing to evolve from content providers to providing real risk prevention services? Time will ultimately tell. But the industry leaders are clearly looking at innovators like Hippo’s direction for solutions, and as Wand’s comments show, Hippo is ready to double down on its current direction.
“There are only four industries that have yet to be disrupted,” Wand said. “Government, universities, health, and insurance.” Hippo is placing their bet that the list will soon be narrowed to three.
