How technology, data, and predictive analytics is changing the way we buyNew market research from Breeze, an online resource for disability and critical care insurance, reveals new dynamics in how consumers prefer to buy traditional products. Visit meetbreeze.com/blog to read the full survey.
The insurance industry is going through digital transformation at breakneck pace.
The most recent data from CB Insights pegs global insurtech funding at $10.5 billion through Q3 2021, already 48% greater than 2020’s year-end total. Driven by insurtechs, insurance is moving towards efficiency driven by technology, data, and predictive analytics. It’s getting away from the legacy operations defined by human underwriters, nine-to-five dealmaking, and cumbersome processes. A computer only needs a couple of minutes to underwrite an insurance policy.
Tech Takes A Seat At The Insurance Table
It’s an opportune time for tech companies to get a seat at the insurance table. They have robust data and technological infrastructure that could be leveraged to underwrite and sell insurance products.
PropertyCasualty360 offered some good insight: Insurers should expect leading tech companies such as Google and Amazon to extend their influence into the sector. By leveraging their information and analytics to state firms, these companies could create a new stream of digital resources. Carriers can turn to such firms and form partnerships through which nice insurance products can be personalized. Tech companies bring a burst of creativity to the insurance market, setting a new standard in product distribution.
Would people go to companies like Amazon, Facebook, or Google for insurance? What about Zillow or Trulia for renters insurance? CVS for health insurance? Tesla for auto insurance?
Breeze put this to the test by surveying 1,500 adult consumers, and the majority would buy insurance from Amazon, but not Facebook or Google
Fifty five percent of consumers would be interested in buying a hypothetical insurance product from Amazon over traditional insurance carriers. Interestingly, just 46% and 38% said the same for Google and Facebook, respectively.
Of the three tech behemoths, Amazon is the most trusted by consumers to offer insurance products. Perhaps because Amazon has forayed into health insurance before; it launched the since-shut down Haven in 2018 and more recently launched Amazon Care.
Moreover, Amazon has explored other financial services – like checking accounts – so there is some consumer familiarity when it comes to Amazon and personal finance.
With just 38% of respondents being interested in insurance from Facebook (now known as Meta), Mark Zuckerberg’s company was lagging pretty comfortably behind even Google at 46%.
This may signify consumer trust issues for Facebook as it battles a seemingly never ending supply of scandals that have led to a total company rebranding.
In terms of Google, its parent company Alphabet does have a subsidiary Verily that recently launched a health insurance entity called Coefficient Insurance. Google also acquired Fitbit, which gives the company access to a massive amount of health data comparable to gold for a health insurer.
Testing Other Possibilities…
Survey respondents were also asked more specific hypotheticals. Would they buy auto insurance from a car manufacturer like Tesla or Ford? Renters or homeowners insurance from Zillow or Trulia? CVS or Walgreens for health or life insurance? What about disability insurance from a payroll & HR company like Zenefits or Bill.com?
Here’s how they answered:
- 66% would be interested in buying auto insurance from an automobile manufacturer like Tesla, Ford, or Honda instead of from a traditional carrier. 34% would not.
- 61% would be interested in buying renters or homeowners insurance from a real estate company like Zillow or Trulia instead of from a traditional carrier. 39% would not.
- 59% would be interested in buying health or life insurance from a health & wellness company or pharmacy like CVS or Walgreens instead of from a traditional carrier. 41% would not.
- 51% would be interested in buying disability insurance from a payroll & HR company like Zenefits or Bill.com instead of from a traditional carrier. 49% would not.
Tesla for Auto Insurance
Of all the hypotheticals asked, consumers were most receptive to buying auto insurance from a carmaker like Tesla. Depending on where you live, this either already is a reality or will be very soon.
Tesla first launched an auto insurance product in 2019 in California. It then launched a similar product in Texas and Illinois and is looking to expand into Washington. Tesla also launched an insurance broking firm in China in August 2020.
Elon Musk is bullish on Tesla auto insurance, which can only be used on Tesla vehicles. On a 2020 earnings call, Musk suggested Tesla’s auto insurance business could account for between 30% and 40% of the overall future value of the business. One feature of Tesla’s auto insurance is the “safety score,” which adjusts premiums based on real-time driving behavior like aggressive turning or hard breaking.
CVS or Walgreens for Health Insurance
59% would be interested in life or health insurance from CVS or Walgreens, and this too might not be that far off.
In 2018, CVS Health completed a $70 billion merger with Aetna, a healthcare insurance giant. By combining funds and analytics, the two companies hope to tackle healthcare problems together, like bringing down costs.
Walgreens might be even closer than CVS in terms of getting into the health insurance market. In September 2021, it was reported Walgreens is considering a purchase of Evolent Health, a healthcare company. And then in October 2021, Walgreens Boot Alliance CEO Roz Brewer said the company will sharpen its focus on healthcare.
HR & Payroll Companies for Disability Insurance
A slight majority of respondents, 51%, said they’d be interested in buying disability insurance from an HR & payroll company like Zenefits or Intuit Quickbooks.
There are two types of disability insurance, short and long term. Short term disability insurance is intended for more temporary injuries and illnesses that keep you out of work for a few months. Benefits will usually replace around 60% of your lost income.
On the other hand, long term disability insurance is meant for severe injuries or illnesses that may take years to recover from or may even be permanent. Benefits can last up to 10 years or until retirement age and will usually replace between 60% and 80% of your income.
In terms of how much disability insurance costs, the general rule of thumb is that you’ll pay between 1% and 4% of your annual income in premium.
All data found within this report derives from a survey created and commissioned by Breeze and conducted online by survey platform Pollfish. In total, 1,500 adult Americans were surveyed. The appropriate respondents were found via Pollfish’s age filtering feature. This survey was conducted over a four-day span, starting on January 4th, 2022 and ending on January 7th, 2022. All respondents were asked to answer all questions truthfully and to the best of their abilities.
Full Survey Results
1. Hypothetically, if automobile manufacturers like Tesla, Ford, Honda, & Chevy (etc.) started offering auto insurance that used data analytics to determine policy pricing, would you be interested in buying auto insurance from them over traditional auto insurance carriers?
66% answered “yes”
34% answered “no”
2. Hypothetically, if real estate companies like Zillow, Trulia, & Redfin (etc.) started offering renters or homeowners insurance that used data analytics to determine policy pricing, would you be interested in buying renters or homeowners insurance from them over traditional insurance carriers?
61% answered “yes”
39% answered “no”
3. Hypothetically, if health & wellness companies or pharmacies like CVS and Walgreens (etc.) started offering health or life insurance that used data analytics to determine policy pricing, would you be interested in buying health or life insurance from them over traditional insurance carriers?
59% answered “yes”
41% answered “no”
4. Hypothetically, if payroll & HR companies like Zenefits, Bill.com, or Intuit Quickbooks (etc.) started offering disability insurance that used data analytics to determine policy pricing, would you be interested in buying disability insurance from them over traditional insurance carriers?
51% answered “yes”
49% answered “no”
5. Hypothetically, if Amazon started offering its own insurance products that used data analytics to determine policy pricing, would you be interested in buying insurance from them over traditional insurance carriers?
55% answered “yes”
45% answered “no”
6. Hypothetically, if Facebook/Meta started offering its own insurance products that used data analytics to determine policy pricing, would you be interested in buying insurance from them over traditional insurance carriers?
38% answered “yes”
62% answered “no”
7. Hypothetically, if Google/Alphabet started offering its own insurance products that used data analytics to determine policy pricing, would you be interested in buying insurance from them over traditional insurance carriers?
46% answered “yes”
54% answered “no”