What are the basic requirements that need to be ensured in order to realise spontaneously contractable insurance policies?
The basic requirement for the successful digital distribution of insurance products is customer focus. We have observed the customers – their desire to consume insurance in the same way that they consume many other things in their everyday lives now: digitally. In response, we have created a digital ecosystem based on a modern IT platform that enables us to map business processes in a data-driven manner. The fully digitized application process is only one part of this. The difference is basically to think from the customer into the architecture and not the other way round for technical reasons.
In addition to the conventional insurance policies from accident to liability, Hepster also offers alternative products from e-bike to snowboard to camera insurance. What receives more acceptance?
Interestingly enough, it is especially in this combination that the sales department works very well for us: Hepster has been working on new and newly imagined insurance product solutions right from the start. We started with various policies for sports equipment and accident insurance, but currently we offer many products as add-on insurances. We focus on new markets and on products such as bicycle and e-bike insurance, which are becoming increasingly important due to a number of trends such as mobility, sustainability and employee focus. We offer this in new forms – as situational insurance for bicycle rental or sharing or as a monthly solution for leasing providers. Conventional insurance policies such as liability, safe conduct and accident round off our offer as cross-selling products.
At first this sounds simpler and more casual than with established insurance companies. However, there are certain complex issues in the insurance industry that you cannot avoid. Who do you insure with, and does the customer know which insurer is behind the insurance?
The customer of course knows who is behind the respective product. We work transparently for the customer with very established portfolio insurers, including Swiss Re and Helvetia, but also with BD24, a subsidiary of Hanse Merkur. Identifying and convincing these important strategic partners took a great amount of time, especially at the beginning of our establishment. Thinking something new and getting involved – going down a new path – is not necessarily in the DNA of a strongly regulated and established market.
Do temporary insurances, which you offer as kind of a “subscription” model, make sense from the company’s point of view? You only acquire for a very limited business, so to say.
When we launched the subscription model in November 2018, this form of duration was also an experiment for us. But “using insurance like Netflix” worked very well from the start. More than a third of our customers in the webshop choose this option – and the customers remain loyal much longer than we originally thought. Of course, there is a certain risk with the subscription model in connection with claims cost ratios, but we are observing this very closely and at the moment the advantages clearly outweigh the disadvantages. The general trend towards sharing, leasing and renting requires exactly the kind of solutions we offer: Flexible in terms of time, unbureaucratic, technically flawless. When renting a bicycle, I simply don’t want to receive mail from an insurer 10 days later and then fill out a transfer form.
What role do solutions that are sold via sales partners and companies, quasi via the electronic Mr. Kaiser, play in the present and future? For example, ski insurance, which is also sold as a voucher by the sporting goods manufacturer, or smartphone insurance, which is included in the package via the retailer?
That is actually the core of our business model. Our webshop, in which we sell insurance directly to the end customer, serves us more than a test environment for new insurance products, features and term models. We mainly deal with the technically seamless integration of individually developed insurance solutions at our partners every day. These are touchpoint solutions that analyse the customer’s needs and create solutions that fit the customer’s needs precisely. We are already doing this in the areas of retail (for example with SportScheck), leasing (with meindienstrad.de, among others), sharing (ListNRide), renting (with various bicycle rentals) and many other industries.
Two of the Hepster founders came from the (long) insurance career and know the desk on the other side. How do the insurance companies react to you? Don’t they see you as competition?
When we started in 2016, we were either laughed at or not taken seriously in many places. Situational insurance that you can book for just one day? New, smaller, more concrete insurance products? Unthinkable. But that has now completely changed. Primary insurers see the changes in the market and benefit from the InsurTech community because they can react faster than an established insurance company to changes in the market and to changing customer requests. Established insurers, on the other hand, are often not in a position to quickly launch a product on the digital market, test it on the customer and then adapt it on the basis of the experience gained. This is due to infrastructures that have grown heterogeneously over decades. Many insurers have recognized this “time-to-market” advantage of InsurTechs and close cooperation are often the result.
The three founders Christian Range (CEO), Alexander Hornung (General Manager) and Hanna Bachmann (COO) did not develop the idea for Hepster in a garage, but at Christian’s kitchen table. The company was founded in May 2016, whereby Christian and Alexander each had around 15 years of experience in the insurance industry. One year later, the first website was launched. Today, the InsurTech-Startup in Rostock employs a solid 30 co-workers, has more than 150 partners and over 5,000 customers.