Insurance model requires digital innovation…Insurance won’t be a typical line item for cannabis businesses – expert

Insurance model requires digital innovation

Compiled by Insurance24

HARARE,  Insurers must adapt to the new digital environment and provide customers with the same degree of customisation they receive in other industries. This requires the traditional insurance model to make way for strategies that incorporate a lifestyle-centric approach, says Stuart Blyth, director at SilverBridge.

With pressure coming from more agile insurtechs, insurers are faced with a quickly evolving market that sees customers increasingly fickle about the products they purchase. Brand loyalty, in insurance and other sectors, is getting more difficult to achieve in a world where insurance is becoming a commodity.

According to an Accenture report, embracing a digitised distribution model promises significant new growth opportunities. This results in the provisioning of more fluid solutions that offer customers new ways of making insurance purchases. From mobile apps to virtual advisors, a connected user base has different needs and expectations than just the phone calls, letters, and emails of previous approaches.

Improving efficiencies

“Of course, this does not necessarily mean an insurer has to blindly enter into a technology-rich environment and implement all the latest trends to be successful. Instead, they should consider how even minor efficiency improvements in the way products are designed and developed could result in a more streamlined customer journey,” he says.

One of the reasons behind the success of insurtechs is that they can provide products and services in faster, more nuanced ways of traditional insurers. Sure, it is nice to use a chat bot to get a customised quote, but it is in the purchasing experience where customers are won or lost.

“People today require fast turnaround time on the platforms they prefer. Those insurers that can achieve this, will be the ones in prime position to differentiate themselves amongst each other and insurtechs.

Return to lifestyle

However, the immediate focus is on becoming a digital lifestyle insurer that delivers on a range of additional service offerings for customers. From wearable fitness trackers to home monitoring, people are getting familiar with a more personal way of impacting on their insurance premiums.

“This puts a renewed focus on effective customer profiling and creating more niche segments where individualised products can be developed and sold. It also sees a more natural positioning for a newer generation of insurance buyers who are invested in social media, mobile technologies, and other digital innovations. Some even suggest that insurers will evolve into ‘preventers’ capable of moving beyond being re-active into one of proactivity.”

While this requires a significant investment in everything from human resources, infrastructure, and technology, it is argued that prevention services could be charged on a subscription basis and be a new source of margin for insurers.

For this to work, insurers must be willing to approach partners outside the sector and incorporate value-added features they would not normally consider. A cross-collaborative environment brings with it more opportunities for product differentiation, delivery mechanisms, and effectiveness.

“These are exciting times for insurers. However, their willingness to adapt to and embrace the digital changes needed for business in the future will determine how relevant they are in the hearts and minds of their customers,” he concludes.

Silverbridge Blog

Insurance won’t be a typical line item for cannabis businesses – expert

By Insurance24

HARARE,  Thanks to California’s insurance commissioner and California Mutual Insurance Company, the commercial cannabis sector has another insurance option. Landlords renting property to cannabis businesses now have Lessor’s Risk coverage, intended for property owners exposed to risks tied to cannabis-related business activities of their commercial tenants.

As the market for cannabis insurance and regulations of the commodity continue to settle out, some experts already active in the space recommend insurers look at price.

“When you look at it from an insurance perspective, I think the entire thing needs to be structure around the price of the commodity,” said Hunter Garth, managing director of Iron Protection Group and a speaker at the upcoming Cannabis Cover event – a multi-city masterclass in May with upcoming stops in Los Angeles and Las Vegas. “It’s literally the lifeblood of every single business that comes in, including ancillary businesses like mine.”

The traditional ways of doing business in insurance aren’t going to fly for the cannabis industry, explained Garth.

“I think insurance has to come in here, into the space, and look at it from a non-traditional way and understand that the economics are moving so rapidly and changing so rapidly that they have to be willing to be as nimble as every other company in the space,” he told Insurance Business.

Drawing comparisons to other legal businesses as a way of learning how the cannabis market and insurance for it will play out is futile.

“Ultimately, you have all these traditional industries where business plans make sense. You can put together a business plan, you can look at insurance as a line item, and it just becomes part of the everyday activity of operating a business,” said Garth.

“In cannabis, because of the discussion of price compression and regulation, the insurance companies have to understand that they will not be treated as an everyday item. They’re consistently going to be priced out, they’re consistently going to look for a higher level of service, they’re going to be consistently tested for their ability to pay out insurance claims – and that’s a big deal.”

And whether the feds finally decide for the legality of marijuana or against it, the landscape of cannabis regulations will still have to be determined by states.

“Even if the federal government came forward and said, ‘we’re going to fully legalize it,’ unless it was a free market, each state is still going to be responsible for implementing their own purpose. As that happens, everyone’s still fearful – no one really knows what this looks like. Even with five years of data, we still don’t really know how this shakes out.”