Niche providers informed by bigger, better data

Insurance is becoming increasingly commoditized, and the result is a price war. In the eye of the consumer, cheaper is now better. This type of competition is bad news for insurance companies, who can’t sustain a bidding war for long.

As differentiation by price point gets harder and harder to achieve, some insurers have sought out other avenues for gaining the upper hand. One of the most notable and successful methods of doing this has been offering more specific products that meet the needs of a very specific market. These niche products are usually driven by the mastery of data, using analytics to identify opportunities that are missed by the insurers striving to make their products serve the needs of as many as possible, and meeting none particularly well.  

The current state of data saturation can be overwhelming, with very few companies successfully employing the use of so called ‘big data’, and not many more successfully utilizing the data they already have. But for some, the availability of data has lent itself to innovation.

Here’s some excellent examples of data-driven niche insurance products:

Usage based car insurance

Companies like Metromile and insurethebox are using devices that plug into policy holder’s cars to provide policies based on usage.

 

Senior citizen health insurance

Clover Health tracks the historical health data of its senior citizen clientele and uses that data to identify high risk patients. It then works with those patients to reduce risk and them to become healthier.

 

For the ladies

There are a number of car insurance companies specifically targeted towards women such as 1st for Women and It's 4 Women. These insurers are often working of the data that puts women well ahead of men when it comes to driver safety.

 

Wearable tech

Wearable is still a relatively new addition to insurance considering its potential future impact, but some companies are already testing the waters. John Hancock for instance rewards its life insurance policy holders with lower premiums for meeting their Fitbit goals and Oscar gives health insurance customers Amazon rewards for the same.

 

Self driving car insurance

Perhaps the best example of what data driven insurance could really be, how exactly self driving cars should be insured is yet to be decided. One thing is for certain though, driverless cars will provide a wealth of data for anyone brave enough to cover them.

It’s obvious that there are still so many untapped niche markets. These current data-driven providers have barely started segmenting markets using the broadest definitions. Our future, it seems like, will be a lot more personalized.

So will niche providers start to take over the market? It’s not as simple as that. There are huge opportunities, certainly, for those able to act on them. Really though, there’s always going to be a place for ‘one size fits all’ insurance, simple and private are as much draw cards for modern customers as personalised. But niche insurance will, at the very least, become more common as our access to data grows.