EIP again recognised in the FinTech Global InsurTech100 list of tech companies, transforming the insurance industry
Despite my creaking joints and involuntary grunts when I get up from the sofa, I don’t consider myself especially old, but in tech terms, I’m a fossil. In the 23 years that I’ve been in the mobile device insurance industry, technology has enhanced beyond anything we could have conceived of in the early 90’s. I sadly, have not.
The evolution of technology and its impact on device insurance risk factors, is important
I find myself occasionally reminiscing with friends or colleagues about the early days of mobile phone tech – a bit like when you discuss the sweets that were available as a kid (they were definitely much bigger back then!) or the TV programs that we used to watch as kids.
‘I remember the days before SMS’, I’ll declare knowingly to some young ‘whipper-snapper’, sounding a bit like one of the Four Yorkshiremen from the Monty Python sketch. The ability to send an SMS commercially, first arrived on UK mobile phones in 1998 and I recall a very senior director of a former employer of mine (a major mobile carphone retailer) saying that SMS ‘would never catch on’. Three years later, 18 billion SMS messages were sent and as early as 2000 you could already pay for your parking in the Baltic States by SMS.
There were battery conditioners (anyone remember those?), phones with external antennae (Ericsson’s looked cool, like a sharks fin) and the only game you could play on your phone was ‘Snake’. Then came colour screens (1998, Siemens S10), the first camera phones (2000), then ‘smartphones’ started to appear like the Ericsson R380 and the Nokia Communicator. The first smartphone that really flew off the shelves was the Nokia N95 which was released in 2006, with over 7 million sales in 12 months. It was however launched just one year before the release of the first Apple iPhone which killed it stone dead, and henceforth started what would become the eventual demise of Nokia. Despite the iPhone’s lower specs, the iOS software was far more intuitive and user friendly than Nokia’s Symbian platform. And, when in 2008, Apple brought us the App Store the game changed again and what you could do on your mobile phone went up a few gears more.
So why do I wander, misty-eyed, through the history of mobile tech? Well, I’m in the business of mobile device insurance risk (or at least the software that manages it), so the evolution of technology and its impact on the risk factors associated with the device is important, and actually quite interesting.
Device metrics can be an indicator of where there may be higher risk
As a business, EIP Ltd continuously mines vast reserves of mobile device insurance claims data to determine what device (as well as human) characteristics are indicators of higher or lower risk. Some indicators are obvious, such as where the customer lives or the screen size of the device they own, but others are less so. For example, did you know that the memory size of a mobile phone materially affects how likely it is for a customer to make an mobile device insurance claim? Or, how often and when a customer recharges their phone can actually indicate how likely they are to claim? Interesting, yes?
At first glance, metrics like these may seem unconnected to risk. But, with a bit more consideration, it’s reasonable to assume that customers who use their phones more, to take photos or play music for example, will gravitate towards devices with higher memory. And, because therefore they will take their devices out of their pockets more, so too increases the likeliness of damage. As such, the memory of the device doesn’t, of itself, affect the risk, but it’s a strong indicator of where there may be higher risk. Logical? Similarly, customers who recharge their phones with a predictable pattern (every evening for example), rather than regularly allowing them to run dead, are more likely to be lower users and therefore lower risk. Would you like to guess whether customers who have a pink phone are a higher or lower risk than those with black phones?
The market maturity of a device also influences risk, but perhaps not as you’d expect
Another interesting anomaly in claims is that for many devices, the risk of damage or loss actually increases significantly the longer the device has been available for sale on the market. This seems counter-intuitive doesn’t it? You might expect (say) the iPhone 12 to be a higher risk immediately after its release, but actually the data on this is clear, the risk of a claim actually increases the longer the device has been in the market. One possibility is that this increase in risk is down to the difference in the type of customer who buys an established model versus those who buy a new-to-market device. Why is this important? Well, because traditional mobile device insurance pricing for new devices is simply based upon a combination of the device cost and existing claims rates. It does not take account of predictable changes in those claims frequency rates over time, which will require higher premiums.
EIP’s powerful pricing engine, takes into account all these metrics and more
Our company, EIP Limited, a Global #Insurtech100 company, has developed a powerful algorithm which, through our pricing engine, takes into account all of these metrics, in real time, to provide mobile device insurance quotations. A market first and meaning we can not only ensure that insurance margin is always preserved for our clients, but we can also offer customers more personalised insurance quotes based upon a better understanding of the risk profile of the device they own, and their individual behaviours.
Wherever technology goes next, we’ll be analysing the data
Who knows where the technology will go next? Significant advances in technology seem to have plateaued a bit over recent years, with new developments being more evolution than revolution – with the possible exception of folding phones which have yet to find mainstream appeal, however the same was the case with big screen phones which took time to catch on. Whatever new features arrive in months and years to come, we’ll be correlating these features to the risk factors, to further refine and sophisticate our pricing model.
In the meantime, if my aging knees allow me to get off the sofa, I’m off to find someone to bore about the days before mobile phones had SIM cards, when ‘Motorola’ ruled the world and how we all, somehow managed to get around without Google Maps!
If you want to know more about EIP’s pricing solutions and how we’re leading the change, please get in touch with the EIP team.
Author: Ross Sinclair (CEO and Founder of EIP Ltd)
EIP is a market-leading global InsurTech business that delivers digital insurance solutions to Telecoms, Banking and Lifestyle insurance providers. We’re an #InsurTech100 company trusted by some of the world’s biggest brands. Learn about EIP and how our end-to-end solutions can transform your scheme management and claims experience.
As the eerie quiet of lockdown rolled across our cities and towns, our devices lit up. In the UK, we watched ‘Whitty’, subscribed to steaming services, binged box-sets, jumped around with Joe and rediscovered how it really is ‘good to talk’.
Has the lockdown changed customer attitudes towards mobile device insurance?
Mobiles, tablets and laptops were central to remote working, home-schooling, online-gaming, house-partying and quizzing. They were lifelines to our loved ones, long-distance relationships and long-lost friendships. As we stayed home and stayed connected, the networks saw data usage surge (by 11GB per person a month on average), and figures from Ofcom show the average phone call rose from 3 mins 40 secs before lockdown to 5 mins 30 secs by the end of it.
But did this increased dependence shift our attitudes towards protecting our mobile devices? Or could mobile device insurance become another casualty of lockdown? What do providers need to consider as we move towards a new normal?
Demand for mobile device insurance will quickly return
Whilst claim statistics show that drops, knocks and spills are less likely to happen at home than on the move, they still put a lot of smartphones out of action through lockdown. Loss and theft reduced significantly through the pandemic, but we can expect these risks to rise again as travel restrictions ease.
Our increased reliance on mobile devices is likely to drive strong demand for protection against the cost of repair and replacement. But, with more pressure on household budgets than ever before, value for money is going to come under a keener lens and mobile insurance will need to deliver on its digital promise and keep pace with the requirement from consumers to be always-connected.
To date, the traditional offering has changed little but the explosion in business and consumer connectivity opens the field for the disruptive effort of InsurTech. New technologies will start to play out in the mobile insurance market. AI and machine learning will help shape risk premiums and drive changes in pricing and cover, and devices themselves will be able to detect when they’re damaged trigger a claim.
Customers will no longer accept the slow, cumbersome experiences of before
As we emerge from lockdown and start to shape the new normal, all generations have embraced and adopted digital services at an unprecedented pace. Immediacy will be a non-negotiable demand; people will expect slick processes, a straightforward experience and real-time resolution. Claim forms, call-backs and lengthy repair cycles won’t cut it. To delight customers in this internet-enabled everything, post-Covid climate, insurers need to speed up the customer-facing processes, work and think digitally. Intelligent analytics will drive personalised insurance cover, protect against fraudulent claims and enable fair, risk-based premiums at point of sale AND beyond as a customers’ risk profile develops.
The global phone insurance market was worth US$27bn in 2020 and analysts forecast strong growth in the next five years. InsurTechs are going to set the pace of change in this industry. Consumers want fast, simple, and inexpensive. They’ll get it. Loyalty may play a less substantial role in customers’ decision making with the move to an online marketplace but innovation and reputation will hold customers attention. As data enables innovation around customized solutions and frictionless service solutions, tech will become a key differentiator. People will lose patience with call-waiting times and switch to top-notch technology-driven experiences. Put simply, we’ve developed a digital independence during lockdown. And companies need to #getwiththeprogramme.
If you want to know more about EIP’s digital insurance solutions get in touch with the EIP team. See how our innovative software, powered by automation, is transforming the insurance experience.
Author: Esther Connock (Business Development at EIP Ltd.)
EIP is a market-leading global InsurTech business that delivers digital insurance solutions to Telecoms, Banking and Lifestyle insurance providers. We’re an InsurTech100 company trusted by some of the world’s biggest brands. Learn about EIP and how our end-to-end solutions can transform your scheme management and claims experience.