Smart phones deserve smart insurance


At a glance, mobile device insurance, or MDI, might seem like a dream product: an absolute necessity in a world where smartphones and devices play an ever-greater role in our lives.

In truth, though, the MDI market is under growing pressure as there is a limit to what customers are prepared to pay for cover, and mobile network operators, insurers and banks find it increasingly hard to keep premiums at their current levels.

Part of the problem is that after 20 years, device insurance remains largely unchanged as a product. Unlike car or home insurance, it is usually sold as a bolt-on when the device is bought and at a fixed price, with no consideration of the individual using the device and the risk they represent.

As the cost of smartphones rises and our dependency on them grows, this lack of flexibility has made MDI seem out of step with the rest of the insurance market, creating an urgent need for smarter insurance pricing.

Global insurtech firm EIP has a solution, however, and is partnering with major telecoms firms such as Vodafone and Telefonica, top insurers like Chubb and Assurant, and fintech champions like Monzo bank to deliver it.

Its proprietary systems enable vendors to streamline the entire process of making a claim, from risk-based underwriting to pricing and delivery.

Its easy-to-use web service and app feature a sophisticated decision engine that automates more than 90 per cent of claims decisions, reducing the need for call centre agents by using chatbot functionality. And its software lets vendors fully integrate their supply chains at the back end, speeding up the process of repairing or replacing devices.

Proprietary systems enable vendors to streamline the entire process of making a claim, from risk-based underwriting to pricing and delivery 

“You could be coming home from a night out, break your phone and within 90 seconds have your claim approved, with a replacement delivered in the morning,” says Ross Sinclair, EIP’s founder and chief executive.

However, where the firm truly leads the way is in its intelligent real-time pricing.

Rather than just relying on data volunteered at the point of sale or gathered through prior claims history, its systems trawl millions of comparable claims on a minute-by-minute basis, combining this with real-time information from customers’ smartphones, such as location data.

This enables vendors to have a real-time view of costs and to offer targeted pricing for the first time. It means an end to arbitrary fixed pricing and a better user experience for customers.

For EIP’s business-to-business partners, meanwhile, it helps improve margins while creating exciting opportunities for cross-selling new insurance products to a more loyal customer base.

Major vendors in ten countries have already adopted EIP’s systems and seen the benefits, typically reporting a 40 percentage-point rise in net promoter score and a 50 per cent increase in profitability.

This is only the start. EIP has developed new ways of assessing risk based on the real-time activity of users and is in the process of patenting these ideas. Much like the telematics boxes drivers have installed in their cars, these services will give vendors a more forensic picture of customer risk and behaviour.

“Smartphones can already tell you whether someone is driving, cycling or walking, sleeping or exercising. They are also repositories of data on health and wellbeing as well as consumer spending habits,” explains Sinclair.

There may be privacy questions at first, but consumers would always be asked if they want to opt in. The cultural barriers are also likely to be overcome when people see the benefits: namely lower premiums and a vastly more tailored service.

Masterminded by former executives at Carphone Warehouse, EIP has 20 years of experience in helping the world’s biggest telecoms firms, banks and insurers to improve their MDI offering and processes. It also helps new players looking to break into the market.

As industries from retail to entertainment and banking reinvent themselves for the digital age, the MDI sector must keep pace. Firms that do not, risk being left behind as customers gravitate towards more nimble and innovative providers.

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