IB Summit: Driving innovation for competitive advantage

"We don't underwrite"

IB Summit: Driving innovation for competitive advantage


By Daniel Wood

“For me, the question about driving innovation to gain competitive advantage directly relates to one of the things that is exciting for me at Flip [Flip Insurance] and that I haven't done at other insurers,” said Sofia Lemaitre (pictured above), head of insurance innovation. “This is the ability to launch products and test things while they're in market and experiment.”

Flip offers short-term, on-demand, pay-as-you-go accidental injury insurance. Lemaitre is a panellist at the Insurance Business Innovation Summit in Sydney on May 11. Her panel topic is “Driving innovation to gain a competitive advantage.”

Lemaitre’s approach to innovation at Flip could hold interesting lessons for the major insurers. Her firm, according to its website, offers “Lightning fast claims” and payouts “within 24 hours (most of the time).”

One very simple product

Lemaitre said that has more to do with the simplicity of the product than technology.

“We’re distributing directly to consumers so we have designed a product that is easy to understand and a claims process that is quick and efficient,” she said. “It's easy for our customers to provide the evidence as it's all digital – you log into your account on our platform, you submit your claim and upload the documents that you have.”

Lemaitre gave the example of a customer with an injury like a fracture.

“You might have evidence of a fracture because you have an x-ray report, or you have a doctor’s certificate explaining that you have soft tissue injury,” she said. “We submit that into our workflow system and because the product is simple and there are no complex definitions that we need to look after, we can process those claims, approve them and pay them swiftly.”

The onboarding process is also very simple and their target market is specific.

“We have set pricing, so you pay $7 for a day of insurance, for example, or $25 for a week,” she said. “One of our main audiences is young people that generally don't have private health insurance, are fairly healthy and don't have any concerns with … getting sick, but their lifestyles can put them at risk of injury.”

 So there is no quoting, she said, which contrasts with policies in general insurance where a complex underwriting process usually precedes giving a customer a quote. Flip doesn’t underwrite in the traditional sense.

“We don't underwrite in the sense that we're not going to ask customers questions about their health, or ask what they do on the weekend,” she said. “We assume that you're going to be doing something risky and that's why you're buying the insurance.”

She said that Flip doesn’t ask a series of questions to determine if a potential customer’s risk is worth taking on.

“In life insurance, for example, you will be asked about your health, you will be asked about your work and pastimes and depending on what you say, you might be declined for that cover, or you might be asked to pay an extra amount,” she said. “So your price, your premium, might be loaded, because you represent a type of risk.”

Lemaitre said there are some eligibility requirements around age and needing to be living in Australia.

“Generally, we just grab your details and off you go,” she said.

The other difference between this form of injury coverage and most general insurance policies is the duration.

 “The other thing that's different is that we are selling this insurance by the day, or by the week, so we have very short-term injury insurance,” said Lemaitre.

She said their product is popular among skiers who are on short holidays but have a relatively high chance of getting injured.

Innovating through continual testing

One of the interesting features of the product design is how the ability to continually test is allowing for a speedy implementation of any improvements and innovations.

“Technology companies do this a lot,” she said. “For example, they might launch a digital experience and do A/B testing, trying different things like changing the name on this button to see if people click on it more.”

However, generally speaking, this doesn’t happen across the insurance industry, she said, because insurers are restricted by longer insurance policy contracts.

“So it takes longer for you to see how the claims come in and it's just more complicated,” she said.

Lemaitre said the legal structure and set-up of their product “really accelerates innovation.”

“For example, we just had an in market test where we've allowed people to buy Flip if they were traveling to Japan for the winter season,” she said. “We put that product into market in late November and we're going to pull it out in April.”

She said they’ve already gained insights.

“We will take that on board for when we design our next iteration of Flip,” said Lemaitre. “That type of testing and experimentation really drives innovation and I think it's very interesting to see how we can do that.”

The other advantage the firm has over big general insurers is building a platform from scratch.

“We’ve got easy access to all our data, including claims,” said Lemaitre. “Larger insurers often do an annual investigation on claims, and as a product manager you only get to see,  for example, the claims that [were] received last year.”

By contrast, Flip can look at claims in real time, she said, assessing issues as they appear and addressing them more efficiently.

IB’s Innovation Summit is taking place on May 11 at the Fullerton Hotel in Sydney. You can register for the event here. The event partner is AAMC, one of Australia’s largest providers of motor accident management services. Sponsors include Endava, Hello Claims and Alteryx.


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