Digitally Insured: Navigating the Online Insurance World
Insuring Your Needs Online: Crucial Information for Customers - Insuring digitally: Essential facts for policyholders
By Moritz Kudermann- 3-minute read
Gone are the days of paperwork and in-person meetings for many everyday purchases. From shoes to groceries to liability insurance, increasing numbers of people are going digital - and so are the insurers. Today, we'll lay out what you need to know before joining the digital insurance revolution.
What's the deal with digital insurance policies?
It's essential to differentiate between companies that allow digital contract signing and those that exist primarily online, referred to as Insurtechs (insurance technology companies). While the former category includes traditional insurers dipping their toes in the digital pool, the latter constitutes companies that specialize in online insurance services, automating many processes to make insurance as straightforward as buying your favorite pair of shoes online.
Insurtechs can act as brokers like Clark, Wefox, or Check24, matching you with policies from established insurers in exchange for a commission. On the other hand, companies like Friday or Lemonade sell their own policies, assuming the insurance risk themselves.
Swift, smooth, and stress-free: the perks of digital insurance
Insurtechs aim to dispense with the bureaucratic mystique that often surrounds insurance. Their platforms promise to make insurance as painless as possible, doing away with hours spent filling out forms in favor of a few clicks through an intuitive app. The claims process is similarly streamlined, with customers able to seek advice via phone or video call.
But are the savings on paperwork and administrative costs passed on to consumers? According to Philipp Opfermann, Financial and Insurance Services Expert at the Consumer Center in North Rhine-Westphalia, the jury's still out on cheaper premiums from digital insurers.
The downsides of digital insurance
Automated processes have their limits, and when it comes to claims, these limits can become apparent. Simple, straightforward claims can still be processed quickly, but Insurtechs' systems might struggle with complex, unique cases. Human intervention is then required, which can lead to longer wait times and potential scalability issues.
Moreover, Insurtechs may lack the physical presence of traditional insurance companies, meaning face-to-face consultations are unlikely to be possible if you run into any issues. Longer processing times for complex claims, however, is not an issue isolated to digital insurance policies, Opfermann notes.
Another concern pops up when an insurer faces financial difficulties. While any company - traditional or Insurtech - can face insolvency, Insurtech startups tend to have less capital on hand to ride out such tough times. The Berlin-based digital insurer Element's bankruptcy at the end of 2024 serves as a somber reminder, impacting over 400,000 of its customers who now must secure alternative insurance coverage.
The all-important question: which digital insurer should I choose?
With Insurtechs still a relatively young industry, it's difficult to crown a clear winner. While they may poach customers from traditional insurers with their sleek digital platforms, time will ultimately reveal which companies stand the test of time. Element's insolvency provides a cautionary tale but does not represent the entire industry.
Expert Opfermann offers a word of advice: "The true quality of an insurance provider often only becomes apparent in the event of a claim." Online reviews on platforms like Finanzfluss or Finanztip can help gauge consumer satisfaction, but even then, it's crucial to proceed with caution.
What insurance types are best suited for digital platforms?
Standardized insurance policies such as travel health or bicycle theft insurance can generally be handled seamlessly via digital channels. These policies tend to have manageable risks and straightforward terms, making them ideal for self-service on digital platforms.
The great digital insurance debate: Insurtechs versus traditional insurers
In conclusion, digital insurance policies offered by Insurtechs provide convenience, cost savings, and personalization but may lack human interaction and face the challenge of data privacy concerns. Traditional insurance companies offer trust, personal interaction, and well-established processes but tend to have higher costs and less efficiency. As with all financial decisions, it's essential to balance your priorities and do your homework before making a commitment.
- The community should be aware that some vocational training programs might offer opportunities for learning skills relevant to the digital insurance industry, which could potentially lead to employment in an Insurtech company.
- It's interesting to consider how technology advancements could contribute to the future of finance, particularly in the business sector, by making digital insurance policies more accessible, efficient, and personalized for customers.
