This article is from the March 15 issue of The Australian Digital Edition. To subscribe, visit
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EXCLUSIVE
DAVID SWAN
FINTECH
Financial advice has had the robo advice treatment and now it’s the insurance industry’s turn, according to the chief executive of ASXlisted disrupter Ensurance, which has grown from 25,000 customers to 480,000 in the space of six months.
Stefan Hicks has been in the insurance industry for more than 20 years but thinks it’s high time for a technology-driven shake-up .
“The insurance industry, in Australia but globally as well, has been very slow to move to tech,” Mr Hicks told The Australian.
“The amount of tech popping up to try and plug certain holes in the industry, on a global basis, is starting to gain momentum but there are no holistic approaches. One might pop up that addresses claims, another might pop up to address underwriting.
“But there’s nothing out there doing everything.”
Mr Hicks said his company Ensurance, a broker that has pivoted into tech, was extremely well placed to capitalise on the inaction , as well as change the way insurance was bought and sold in Australia.
In a process similar to comparison websites, users can search and compare insurance options on Ensurance’s platform, but the key difference, according to Mr Hicks, is that Ensurance handles the entire transaction itself. It’s also AFSL licensed to give online automated advice and connect participating insurers with customers , while providing customer support in the background.
Ensurance also white-labels its industry products in construction, home and contents, warranty, trade and property insurance, which has been the key driver behind the 18-fold growth in customer base in six months.
Mr Hicks said his whitelabelled platform was already in demand from the major global insurers including Chubb, QBE and Lloyds as they look for ways to streamline products while cutting costs; at a time when margins are closing on the insurance industry and stock prices are tumbling.
“While industry margins are under pressure, ours are trending higher,” he said. “One of the reasons the margins are under pressure is rising compliance costs. Our solution automates this and cuts costs significantly in this area.
“We are increasing insurers’ margins on products. There’s little maintenance involved in selling products digitally for an insurer, there’s no staffing involved .”
While online aggregators like Compare the Market and iSelect have been around for years, Mr Hicks isn’t worried and says his company is based around a different business model.
“It’s been fairly irrelevant what the aggregators have been doing; their model is based on advertising and they just pass the actual transaction over to the insurer,” he said. “They’re limited on their advice, most of them are not licensed to give advice at all so the advice you actually need as a consumer , in order to match the risk to the correct policy, is lacking. Our system addresses all those issues.”
Mr Hicks said customers were different today compared with 10 or 20 years ago, and did their research in a way they never used to.
“We’ve recognised the consumer wants to be empowered by doing their own research and by their own purchasing online, and this is evident across all products and all industries,” he said.
“People are just more savvy. They want something that’s 24/7, works after hours, and they don’t want to be messed about. They don’t want to even spend time to talk to people, they just want to get it done.”
The company listed on the ASX last year raising $2 million and is now poised to continue growing both its local and international business, with a particular focus on London.
The Ensurance product focuses on the point of purchase and Mr Hicks said there was little doubt insurance was a seen as a “begrudged” purchase by consumers . “People are purchasing a product with the unknown knowledge that it may or may not be used,” he said.
“Obviously being a broker, we act on behalf of the client. So it’s our job to get legitimate claims paid. And by doing that, what we have to do is attract and place high-level insurers on to our platform that ensure us we won’t have problems at a later date when it comes to claims.
“It’s our brand as well and we don’t want to damage that.”
Looking at the competitive landscape and the insurance industry more broadly, Mr Hicks was confident his first-mover advantage would leave any wouldbe rivals struggling to catch up.
“The catch-up to get to where we are, knowing what we’ve invested and how long it’s taken us to get where we’ve got to, would take a long time,” he said.
“And from here the industry will move fast. It’s so far behind in terms of digital innovation, so from here in the next five to 10 years, it will look like a very different industry.”
Copyright © 2016 The Australian
