The pandemic wreaked havoc on wedding planning, disrupting somewhere between 63-80% of all weddings in 2020 and pushing wedding plans for many couples as far into 2023 and 2024. It also hurt popular wedding companies, like David’s Bridal, which went bankrupt in 2019 and is now to become a much stronger company. Its optimism is certainly fueled by the fact that “weddings are back”, but it is also boosted by a major improvement in its online presence.
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7;s Bridal now has an app, Pearl, which, combined with its online version, touches 90% of all brides in the United States. Pearl is monetized (it accepts advertising) and it operates as a value-added service (it’s a wedding planning app ) that goes far beyond selling wedding dresses.Weddings are a good case study for niche products in insurance. Brides and grooms are still dealing with covid-related challenges. Wedding venues, caterers and suppliers, such as florists, are charging higher prices due to increased demand and increased supply chain issues – making weddings a greater risk. Air travel is experiencing less consistency than ever as we saw this past holiday season. All of these things can make wedding insurance quite appealing to parents and couples spending large sums to celebrate the knot.
Additionally, online and mobile tools, such as Pearl, the Knot and Zola, are opening the floodgates for insurance product placement. Can wedding insurance be embedded in these brands? Can wedding insurance also be sold through venue and supplier sites (those who may lose revenue through cancellation) or through planners?
In either of these scenarios, insurers must capitalize on niche opportunities with new products, streamlined product development, and easy-to-use integration points. Niche insurances are growing to support new risks, new market segments and customers who want pricing based on their personal risk. In Majesco’s recent thought leadership report, Future Trends: 8 Challenges Insurers Must Meet Now, we discuss niche products, but we also look at a wide range of factors affecting insurance, from inflation to the supply chain, plus unemployment, rising interest rates. , and more.
Why should insurance companies pay attention to niche product demand?
If an insurer (or any business) wants to grow, there are essentially three high-level options. Add new or change products. Add new or expand markets. Do both. It sounds so simple!
However, insurance can be difficult, complex and time-consuming with products and services that may not appear to deliver value. Many insurers have developed products for niche businesses – such as restaurants, daycare centers and more, but need to go beyond developing personal niche products that assess risk and price specifically for them, rather than as part of a market segment.
Today’s customers expect more. They want a risk product, value-added services and an experience that gives them what they need to manage their lives and humanize the entire customer lifecycle. Part of the humanizing aspect is to offer niche, personalized products, services and experiences that fit their specific risk needs and use their personal data. From increased interest in life, critical illness and disability insurance to telematics and cyber insurance and more, customers want insurance products that assess their personal risk, lifestyle and behaviours. Or, at the very least, they want products that are ready to use when needed, such as wedding insurance, travel cover or commuting insurance.
“Life goes pretty fast.”
Personalized, niche product management is rapidly emerging as a strategic and operational approach to meet customers’ changing and growing needs. Companies that tailor their product strategies to new risks, markets and demographics have a much better chance of growth than those that focus solely on expanding market share for their traditional products. Personalized niche products flex to meet demographic and market trends. They remain mobile.
Traditional product-oriented strategies, while still relevant for certain products and demographics, such as Boomers or Gen X, handicap insurers for other segments – limiting their ability to attract new customers. Insurers need an expanded understanding of what a product is. Today’s insurance product should be seen as including one. ) the risk product, b.) value-added services and c.) the overall customer experience. This will meet customer expectations to deliver value. Part of that value comes from providing risk prevention and risk mitigation features and services that help customers avoid losses, while dramatically redefining the customer experience.
These niche products will increasingly include a data-integrated component that enables personalized pricing of risk and a better customer experience.
People and companies are on the move.
If I own a food truck, or I’m an urban commuter, or I just like to travel, movement is part of my risk profile. Motion data (telematics) has the potential to strengthen and expand the niche products that could serve these circumstances.
Are people and businesses covered wherever they go? Commuter injuries are rare, but in some cases they grow. Bus-related deaths are on the rise. Commuter train injuries are decreasing, but rail accidents are increasing. Aside from traditional transit numbers, all other mobility options seem to be in the midst of change. Ride-sharing, bike-sharing, scooter-sharing, Uber/Lyft use, and non-traditional commuting are each growing in use without sufficient, relevant growth in insurance products.
All these scenarios contain risk gaps in the insurance cover. Not all drivers are properly insured. Bike sharing and scooter sharing services protect themselves with disclaimers that leave users completely unprotected. Many transport companies have their own insurance, which of course does not pay directly. Insurers can search these gaps to find areas where new products make sense. In many cases, insurers interested in providing niche insurance simply need to look beyond the risk product and into the gray areas.
If an insurer has the ability to use IoT and telematics data for location services and the ability to turn insurance on and off depending on circumstances and location, it has what it needs to offer all sorts of new products to suit different lives and lifestyles.
Travel insurance is perhaps one of the fastest growing opportunities in all insurances because travel itself is on the rise. Between 2021 and 2031, travel insurance is expected to grow from $14.2 billion to $124.8 billion.[i] While it may not be considered niche insurance, by some standards, in many ways it fits the profile. It can be adapted to niche lines. It can be improved through data and technical capabilities, providing digital service when needed. And it will be sold mostly as an add-on through embedded channels. Are the insurance companies prepared to fit into these channels?
Personal niche opportunities in life, health and illness.
Consider the innovative approaches of some insurers that deliver value by offering more than just the risk product, such as a new critical illness product that provides DNA testing to support personalized cancer treatments, a new dental product that includes a smart toothbrush to monitor brushing for improved health and a workers’ compensation product that tracks and supports employee safety and risk monitoring.
Life and health insurance companies, long hampered by an inability to expand product purchases through their existing customer base, can now use niche products to create new opportunities while helping people live longer. Their innovations are likely to be more ecosystem and partnership oriented, requiring insurers to create or find niche products in line with traditional product goals. It is the perfect time for L&AH insurers to innovate as they can now take advantage of data from wearables, scales and other health monitoring devices – using niche products such as value-added services that return valuable data.
Security as a new niche.
Property and casualty insurance may not appeal to the masses, but financial security and property security are all the rage. Whether you’re talking about home security, personal and corporate cyber security, or mobile/vehicle tracking, people increasingly understand risk and value prevention. In each case, security is an area ripe for value-added services and product development.
Personal cyber is obviously well suited for development as it leverages both new product development and expanded market development. It is unlimited by limited channels. It is almost unlimited in reach due to the fact that anyone online can see an ad and most people online feel some degree of vulnerability.
Home and property security companies have lost market share to do-it-yourself video and sensor surveillance from companies like Ring, Arlo, Nest and Wyze. Some insurance companies offer discounts for those who have monitoring services, but the more innovative companies work with home data systems to develop whole-home protection that includes fire and flood.[ii] They use the customer’s desire to prevent damage as a self-selection tool and leverage the customer’s own investment in technology to reduce the risk of damage.
It is a good example of meeting customer needs in the middle of the customer life cycle.
Where is your new niche?
Preparing to meet and take market share with new products is, oddly enough, the exact same preparation that insurance companies must do to transform their traditional business as well. Ecosystem and API development can be used in both areas. APIs increase the speed at which you implement a new or versioned product or process, new customer experience, or value-added service. The value of an API is that you can use it in many cases, making APIs the ultimate “value multiplier”.
According to AM Best’s latest innovation assessment report, the emergence of digital platforms and ecosystems will make relationships with customers even more important. Insurance companies can improve their access to customers and increase their revenue streams by providing additional services.” These new streams and services are the two-way highways of ecosystem flows. In some cases, insurance companies will provide them. In other cases, they will cooperate to bring them in.
New niche developments can also spur the transformation of an insurer’s data strategy. Real-time analytics will give insurance companies a competitive edge and an improved understanding of how people live, work, travel and move. In fact, niche products (similar to greenfield development) can pave the way for future core products by enabling a test-and-learn strategy before a larger initiative.
Anyway, it’s time to prepare. Majesco has designed and built cloud-based frameworks and modern systems that enable insurers to go where they want and create what they want to create. If you want to understand the new innovation tools that can bring niche products to life, be sure to contact Majesco today to learn more about our core, underwriting, data and digital solutions that accelerate carriers’ ability to develop and launch new, innovative, personalized, niche product to drive growth in a market with rapidly changing risks. For a quick look at what’s trending that matters to your organization, be sure to read Future Trends: 8 Challenges Insurers Must Meet Now.
[i] Kanhaiya, K, Sourabh E, Vineet K, Travel Insurance Market Research 2031, Allied Market Research Report, Nov. 2022. [ii] Hippo teams up with Ring to help protect homes from water damage, fire and burglary, BusinessWire, June 13, 2022.
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