This publication is taken from a an article written by António Ferreira @ ECO — Economia Digital, an economic digital newspaper which gathers an innovative technological platform to independent journalism.
ECO Seguros questioned the insurtech regarding the impact of the pandemic crisis on the operation and on the technology strategy over an 18-month horizon. In written response, Inês Raimundo (Product & Business Development Manager) and Domingos Bruges (co-founder and Chief Executive Officer) explain how Habit differentiates itself from transforming traditional habits of incumbents, point out challenges and opportunities and testify that insurers are now more attentive customer needs.
Developing a post-Covid scenario, insurtech assumes that it wants to help insurers reinvent themselves in the face of new consumer behaviors. Addressing topics such as operational activity, competitive environment and regulatory framework, Domingos Bruges reveals that Habit “recently reinforced the team of partnerships and strategic positioning of the product, impacting its ability to contact customers and a reduction in the time to implement insurance, respectively”.
For the co-founder of Habit, “there is a vicious circle in these factors, since launching an insurance product in weeks, instead of the traditional 6–8 months, is solidifying as an additional element in our value proposition and the increase our customer conversion rate.” In the market, “the biggest barrier that we have found to the adoption of more digital solutions in this sector is the still reserved stance of the players who see in the digital channels a threat to the insurance distribution chain. In our opinion, digital lives and complements existing channels, makes sense and works well, adding value to the insurers’ offer”, he says.
A facilitating partner, a transition link to the digital journey
One of the proposals that insurtech offers to the market is aimed at auto insurance companies: a UBI (Usage-based Insurance) or PAYD (pay as you drive) solution, commonly called pay per mile (paid per kilometer, in free translation) , which replaces the usual car insurance with a coverage more suited to the actual use of the vehicle. To this product, Habit added digital solutions for pet insurance and home insurance.
Inês Raimundo stresses that Habit has the mission “to make access to insurance products easy, fast, safe and unbureaucratic, through solutions with a strong digital component”. To this end, the technology “presents itself as the transition link between traditional insurance and insurance with a digital or partially digital journey. In insurance, the traditional model is still the most adopted, gathering a majority customer base. To stimulate the digital transformation of this sector, our business model is indexed to the growth of our client: without start-up or contractual or operating costs, we operate on a SaaS model (Software as a Service)”.
Asked about more dynamic business segments, Inês points to the opportunity factor : “Nobody wakes up thinking about buying insurance, so having contextual information is key so that it is possible to demonstrate the added value of a product to a customer”. For Inês Raimundo, “it is clearly easier to promote travel insurance to someone who is traveling or about to do so. And that is where our focus is.”
The Pets, Car and Home segments “are also good examples”. In the case of pet insurance, “it is interesting to see that insurers are beginning to be concerned with promoting preventive care plans and rewarding clients who properly care for their companion. The result is obviously positive for both parties: the customer who provides greater clinical care and a better quality of life for his animal, and the insurance company that reduces the number of claims ”, he explains.
This conclusion is reinforced because the solutions for these segments “are having an extremely interesting adoption, given the current position of the insurers, who prefer to promote prevention and care instead of reacting in the event of an accident”, notes Inês Raimundo.
Pandemic did not condition execution, but affected the human side
“As creative as the team is and as many as the initiatives may be, a video call is not a substitute for breakfast or an evening between colleagues, who are also friends”, says Bruges, who shares the company’s leadership with Sasha DeWitt, co-founder and COO.
For this reason, confinement determined by the pandemic context conditioned the human factor: “The distance made everything a little more difficult”, he acknowledges. However, in the day-to-day work and execution, “the team is strongly accustomed to working on the basis of technologies and anywhere, so the company’s activity has not been affected by social restrictions”, says the company’s CEO whose solutions run on global insurance systems like Allianz and SAVA.
“Portuguese insurance companies are very attentive to the reality and context of customers”
Anyway, as a recent survey of national fintechs documented , the crisis is having a negative impact on the economy and business, but it also suggests challenges. In this context, providing an adequate response to the needs of insurance consumers can be an opportunity. “Fortunately, Portuguese insurance companies are very attentive to the reality and context of their current and future customers,” notes Domingos Bruges . If it does not apply directly to Portugal, I would say that insurers are, in most cases, comfortable with their performance history ”.
In many cases, he says, “a total combined ratio of less than 75% is revealed (the combination of operating costs and claims is less than 75% of the total premiums), which indicates that in the last 150 years, insurers have been capable of accumulating impressive wealth. The comfort point is high” , considers Domingos.
But the CEO says: “our message is focused on promoting that insurers continue to do what they have always done until today; to protect and offer the products and price that make the most sense in the current context and risk ”.
Middle East and Africa markets on the radar
The company builds and operates digital products in Lisbon, but has an office in New York. “ Habit works with insurance companies or brands that have an ecosystem of customers or users and want to launch their own insurance product. Our mission is to democratize access to insurance products, reducing the cost of the premium by increasing efficiency in the distribution and acquisition of customers ”, explains Domingos Bruges.
Digitization “represents a strong component of our product, however, we consider that the great differentiator is the high leverage of contextual and continuous data about the policyholder or the protected person/good”.
International expansion continues and, in this sense, Habit “has focused its energy on partnerships in Europe and the United States of America, with new regions such as the Middle East and Africa beginning to appear on the radar through orders placed by customers”, reveals Habit’s CEO.
Looking to the future, Bruges adds: “The years 2020 and 2021 will represent a significant point of growth, so we intend to maintain the execution of the vision. The company’s current structure was critical to achieving the current state and will be key to the execution of the strategy towards the global vision.”
Habit Analytics emerged in 2018 and has accumulated experience in Portugal, where it maintains product development. Since then, it has attracted investors and completed financing rounds, crowning the course with global distinctions, being the first in the EMEA region and one of the eight most innovative in the world in the 2019 edition of the Zurich Innovation World Championship.
In its genesis, insurtech passed the screening of the most rigorous accelerators for startups in the USA, such as 500 startups. Habit was also one of Bright Pixel’s largest investments, Sonae IM’s vehicle and investment structure, with investors in the USA, Canada and Portugal, among others, FundersClub (Silicon Valley), BuildingLink (New York) or Banco BiG (Lisbon).
By António Ferreira, ECO — Economia Digital