Tech Talk: Insurance apps – industry gamechanger or ‘necessary evil’?

In 1997, a basic arcade version of the game Snake was built into the classic mobile phone Nokia 6110 and while many consider this to be the first mobile application ever invented, it is largely unknown when the first insurance app was launched.

Fast forward to the present day and the insurance app has bridged the insurer-policyholder gap, enabling customers instant access to their policies, streamlining claims and improving productivity. 

But how popular are they?

A survey published in May 2023 on Google Play Store apps by analytics platform App Radar examined four insurance sectors – motor, travel, home and life insurance – revealing a 40% year-on-year increase in downloads in 2022 at 2.2 million, compared to only 1.6 million in 2021.

It also found that one in ten (10%) adults in the UK could be using Android apps to manage insurance policies – with Hastings Direct Insurance taking the lead at 1.2m lifetime downloads.

This was closely followed by Cuvva at 1.1m, Holiday Extra at 1m and MyAviva at 652,000 downloads.

Speaking exclusively to Insurance Times, Lorna Whalley, head of retail change at Aviva, said: “With app adoption on the rise, our customers are increasingly mobile-first in their servicing and communication preferences.

“From an operational perspective, customer servicing via the app leads to less reliance on other forms of communication like phones, and a more instant resolution for the customer.”

Increased competition

But a constantly evolving on-demand economy is an issue when it comes to apps – and insurers have had to keep pace – especially when up against more nimble startups. 

Silvio Peruci, managing director of App Radar, said: “As the cost of living crisis continues throughout the year, competition among insurance companies for new app users will only increase. Startups in this area are hungry to disrupt and make insurance easy for their customers with new tech.”

One example of an insurer that is innovating is Hastings – its digital and marketing director Eve Robertson noted that providing simple digital journeys for policyholders has been at the heart of the insurer’s strategy for several years.

Robertson said: “We’ve recently made it much easier for customers to make changes to their policy or file a claim in the app and our customers can expect to see even more out of the Hastings app in the future.”

Many insurers and insurtechs use apps to get to know their customer, such as Aviva and Inshur. 

MyAviva also allows customers to see all their Aviva policies in one place, with common changes such as adding drivers, changing cars or moving house able to be made via the app. It also a virtual assistant to support and guide customers in real-time.

Through push notifications, Aviva can also share extreme weather alerts and useful content to help customers prepare for such events.

Whalley continued: “Through their interactions on MyAviva, we’re also able to learn more about our customer’s individual needs, allowing us to make personalised recommendations to help customers feel more positive about their financial futures.

”This enriches our relationships with our customers and drives engagement, which in turn can lead to increased loyalty.”

Inshur is a global insurance provider and strategic partner of Earnix, the firm concerned with the on-demand economy. Its head of pricing Milan Chavda said: “The insurance industry is notoriously slow to change, especially when it comes to implementing technologies. But it’s our deep understanding of both insurance and technology leveraging artificial intelligence (AI) and data, that we are able to cater to a very important workforce – the on-demand driver.

“With the Inshur app, on-demand drivers can enjoy flexible coverage and protection which adapts to the job – helping them to stay on the road and keep earning.”

On a similar note, Freddy Macnamara, chief executive of Cuvva said: “Across iOS and Android users, the Cuvva app has been downloaded millions of times. It’s a great testament of providing a service that better suits the changing needs of customers today.

”People want flexibility, accessibility, speed and ease when it comes to getting insured.

“You can do just about anything on your phone, why should buying car insurance be any different? Unless insurance companies innovate and adapt to the digital world, they will be left behind, especially younger generations who spend several hours a day on their phones.”

Low engagement 

Despite the reported advantages of apps for both carriers and consumers, research firm GlobalData says that general insurance app usage is low.

Its UK Insurance Consumer Survey 2022 showed that pet insurance had the highest rate of app usage among customers with 7.7%. Following this was travel (3.1%), motor (3.2%) and lastly home at 2.2%. 

Benjamin Hatton, insurance analyst at GlobalData, said this does not show the full picture as many consumers might buy online and be steered towards an insurer’s app. 

For Hatton, there are two types of firms using apps – the legacy players going digital such as Aviva, Hastings and Admiral and the newer digital players offering short-term solutions, such as Cuvva or Tempcover. 

Referring to digital players, Hatton said: ”The engagement platforms generally need to be an app as they will need to connect to wearable devices in order to function, necessitating the app as opposed to the app enhancing or simplifying the customer experience.”

Peter Blanc, group chief executive of broker Aston Lark and head of mergers and acquisitions at Howden, noted that insurance businesses know that they need to offer apps to customers, but want them implemented with minimum fuss.

He said: “Insurance apps, one of the challenges is that we all work in [insurance], so we love it. We have acknowledged the fact that, for a lot of customers, particularly personal lines and small business customers, [apps and insurance] are viewed as a bit of a necessary evil.” 

Blanc gave the example of banking apps replacing his regular trips to the bank as an ideal blueprint, explaining: “I never ever speak to my bank anymore, because everything’s on the app I can pay in money. I just can’t imagine my life without my banking app anymore.”

But would an increase in customer usage of apps reduce interactions between the consumer and insurer?

For Blanc, insurance apps can not copy the example of those used in the banking sector as policies are renewed on an annual basis, with customers not necessarily wanting to interact with their insurance policy outside of claims and renewals. 

He continued: “With insurance apps in general it’s a challenge, because people only tend to want to engage with insurance periodically. It’s difficult to get that level of customer engagement.”

A cheaper option? 

So, while insurance apps do present utility for insurers and their customers they remain as an imperfect method of interfacing between these two groups because of the inherent nature of insurance buying. 

Developing an app can also be expensive – a basic app can cost as much as £10,000, while more complex products can reach up to £1m, according to Riselabs. Could cheaper technology present an opportunity here? 

QR codes in insurance have existed for more than two decades and are used for marketing purposes, claims processing and acquiring customers.

For James York, founder and chief executive of Peaccce, the insurance industry should eschew building more apps in favour of developing data portability layers. Peaccce’s solution, called Car QR, could solve the low engagment with insurance apps, he said.

York said: “The main use case with Car QR is connecting with the driver. For me, the QR codes are a conduit towards an application layer – it’s a way of linking to awareness or presence of coverage and risk management. If I see someone bang into your car and send a note you’ve got a witness.

“I don’t think that insurance firms should each build their own app, if you know your customer is buying more than one type of insurance.”

QR codes are free to use, widely available and can be created for free, representing a much cheaper option.

Peruci added: “Reports are claiming that the global insurtech sector is expected to be worth almost $30bn (£23.6bn) by 2026 from $8bn (£6.2bn) in 2021.

”For the UK specifically, the market is ripe for growth with an estimated £50bn (£39bn) potential revenue opportunity from disruption. This should serve as a warning sign for the incumbents that dominate the market with legacy technology.”