This Startup Wants To Crack the Insurance Product Puzzle

The pandemic changed the optics on insurance. While agents and brochures told stories in terms of persona or life stages to sell the products, anxious customers wanted personalized protection that is simple to understand.

It is why product design flexibility is essential. In fact, McKinsey’s “Insurance productivity 2030: Reimagining the insurer of the future” argues that simplifying products and portfolios will be a major gamechanger in the next decade.

It is also challenging. Moving from product conceptualization, research, and testing to underwriting and getting regulatory approval is an arduous journey. It is why product development is slow and why many insurtechs instead focus on lower-hanging fruits such as data capture, customer information management, and digitalizing distribution.

But Coherent is not just another insurtech.

Seeing insurance as microservices

Like insurance, IT faced similar problems in the past few years. Customers wanted better customization. Achieving it with monolithic software design was next to impossible. So, the industry is pivoting to microservices, containers, and different forms of reuse. 

This same flexibility is what Coherent is looking to bring to the insurance industry. It wants insurers to create modular products that are highly customizable yet compliant — with no code.

A series of platforms, notably Product Factory, connects to a proprietary Spark engine that works with data storage and, via APIs, interfaces insurer systems, payment gateways, and social messaging platforms.

“The Product Factory basically reduces [product development] from months to weeks or days. We are basically reinventing how product management works end to end. This is a massive opportunity for the industry as it needs to develop products much quicker and be more responsive to customers,” says John Brisco, Coherent’s co-founder and chief executive officer.

A big part of Product Factory’s agility lies with its use of microservices. Peter Roschke, Coherent’s chief technology officer, explains that insurers can then combine multiple products to create solutions.

“Many insurers have struggled with being very product-centric. But customers don’t really have a product need; they have a solution need. And usually, it takes multiple products to actually fully address that need. Being able to combine the products and managing the rules for combining them from a regulatory standpoint into a unified value proposition is what many insurers are looking for,” he explains. 

They can do this without code, allowing insurers to focus on the value proposition and not the technical details, adds Brisco.

The intelligent Spark

At the heart of Coherent’s ambitions lies the Spark engine.

Roschke describes it as a product that combines all the different rules and prices. It is their core intellectual property and built with past knowledge. It helps insurers, underwriters and regulators understand the logic behind how a product works.

“And we designed it to let insurers manage their IP or logic so that they can quickly iterate and create new products from other products. The ability to create multiple products is what I think is going to be a very powerful idea for insurers — whether it’s inside their own walls, in partnerships with a distributor, or at a marketplace,” Roschke claims.

In short, insurers can create multiple versions of the same product for agency distribution and make it available for online marketplaces. This allows them to scale even faster, optimize distribution strategies and stay compliant with regulations.

AI plays three roles in Coherent’s value proposition: improving product design, optimizing recommendations, and monitoring outliers.

It quickly captures changing customer behaviors and needs for product designers to further optimize existing products or create new ones. Agents can quickly make the proper recommendations with AI assistance. Simultaneously, the insurers can understand outliers in recommendations to find out why a particular product is popular or why agents are not taking on specific AI recommendations.  

The winds of change

Sun Life already sees the potential of Coherent’s value proposition. The insurer is using Coherent Explainer to create a more accurate retirement calculator for the Hong Kong market. Spark handles the logic and rules; it presents the results as fun illustrations, tips, and clear explanations from immediate calculations.

AIA Indonesia uses Coherent Connect to build customer relationships under their “Buy One, Love One” campaign, where customers can buy similar insurance products for their loved ones based on the same premium amount that they are currently paying for theirs. The first fully-digital journey for AIA Indonesia achieved an 86% open rate on WhatsApp.

These successes are only a start for Coherent. Both Brisco and Roschke are also preparing for further industry shakeups as pent-up demand for insurance flexibility explodes. One macro trend that both of them are eyeing is combining insurance and wealth management products as a single solution. Customers want a plan that offers them health protection and grows their wealth faster beyond savings or unit trusts.

Currently, achieving this requires buying into several products. Insurers see the potential of creating a product that offers flexibility in mixing and matching the products as features. But different regulatory regimes and expertise make it difficult. 

“Doing so means every insurer needs to start taking a step back and rethinking what that kind of revised product proposition looks like. You’re going to get this hybrid of wealth and insurance protection products combined as one. It essentially means insurers will need to move into the [wealth management] space to provide that kind of savings protection element to high-net-worth customers,” says Brisco.

Another area is microinsurance, which so far only developed as a low-cost option that is not a money-spinner. But as specific concerns about health and medical grow, customers will want particular features as a microinsurance plan and not as an add-on or rider to their existing products.

“So, you’re going to see consumer demand for being able to pick and choose the features they need. Obviously, a platform like Product Factory enables modular product creation, something which we see as being a huge trend, particularly in Asia,” explains Brisco.

“Obviously, [these factors] will create the winds of change within the industry, and it’s something that a business like ours is positioning for,” he says with confidence.

Winston Thomas is the editor-in-chief of CDOTrends and HR&DigitalTrends. He is always curious about all things digital, including new digital business models, the widening impact of AI/ML, unproven singularity theories, proven data science success stories, lurking cybersecurity dangers, and reimagining the digital experience. You can reach him at [email protected]. 

Image credit: iStockphoto/oatintro