Crowdsourcing Practice: The New Go-To Trend For The Insurance Industry
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Remember the famous crowdsourcing campaign held by McDonalds in 2014? Yes, the one and only ‘McDonalds Burger Builder’. It was when the giant fast food chain decided to offer their customers to submit ideas. Moreover, they also allowed control over the varieties of burger customers would prefer to see in McD outlets. Customers could design perfect burgers of their choice online and submit. In return, the rest of the country had the choice for voting for the best burgers.

In Germany, the fast food chain encouraged its consumers to create campaigns of their own. These campaigns included valuable content marketing materials and viral videos among many other things. These, of course, charged the ‘I’m Lovin It’ chain, nothing at all. After declaring contest winners, McDonalds started weekly release of burgers of their preference, along with a quick, small bio and picture of the creator. It was a huge success.

Crowdsourcing

When it comes to crowdsourcing, often a specific company will organize a contest for a promotion, project, or the purpose of testimonials. The companies receive numerous submissions. They offer rewards to the submissions that are the best and utilize the concept in marketing, product development or any such area. Crowdsourcing usually involves the practice of deploying a substantial amount of distributed individuals to execute a task. It’s a budding trend.

Netflix used crowdsourcing to create an algorithm to enhance the accuracy of predictions regarding movie preferences of individuals. LG used it in 2009 for designing its new phone. MasterCard also took an advantage of this practice in its advertisement. Now you think the practice won’t catch on with insurance? Well, it already has. Allstate, through a challenge of Claim Prediction, fetched a forecasting model, which assisted the insurer in determining the customer’s likelihood to suffer an injury during involvement in a vehicle crash.

Disruption Model in Insurance Economy

Meaningful intelligence can be easily fetched with the help of crowdsourcing at virtually anytime and anywhere. Crowd offers consumers to get as gritty as they want to, beginning from predictive surveying of higher-level, for instance, Kaggle that draws various thinkers of PhD-level to handle sophisticated queries, to task-oriented, for instance, Amazon Mechanical Turk that blends AI and human to answer questions, which cannot be handled by a computer in a strict manner.

As they offer careful consideration regarding joining the economy of sharing, having a wary eye focused on the new entrants, executives of life insurance have accepted the notion of crowdsourcing as the best way to generate ideas. Sure the ideation is very significant, considering it as the best function leaves a huge potential on the table. The temptation to ignore and walk away from the potential can be well understood, but it’s quite unwise gesture to make.

The Rise of Disruption in Insurance Industry

If everyone is trying crowdsourcing, how about trying to use the crowdsourcing practice in insurance to offer access risk capital that is budget friendly? Why not offer rewards to policyholders for policies that are not used?

Friendsurance, a Germany-based company launched back in 2010 utilizes a peer-to-peer concept for insurance. This is mutualizing similar risk amongst a group of friends (self-selected) and rewarding these groups with bonuses in the form of cash at year’s end every year, but only if they remain without claims. Through a fund association, the group manages small claims. It also has an insurance company, which backs the arrangements for larger claims. A premium is paid by each member of the group. A part of this is carried forward to the fund that covers small losses. Another part of this premium is offered to a regulated insurer offering the insurance policy of group to take the risk for bigger exposures.

Free Publicity, Greater Benefits

Crowd companies, nowadays, have identified over a dozen insurance startups based on the crowd. Surprisingly, these startups are emerging from hotbeds of financial industry such as London. Peer and crowd-based models have influenced the financial sector, hospitality industry, and transportation space among other industries.

We’re witnessing the growth of a budding set of insurance startups, which are enabling crowd-based, P2P, and Pro-rata coverage models, which leverage the crowd. These mostly include peer-to-peer offering along with a handful, which is also enhancing the insurance delivery via new technologies.

What Experts Have to Say

Innocentric’s Steve Domeneck calls the attempt to harness the mind-bending power as ‘Crowdxiety’.

Timothy Li from Accenture charts that by making teamwork key segment in business processes, employee interactions, and personalization customer, and extending their horizon from the workforce to the practice of crowdsourcing. Li believes that insurers are offered with opportunities to carry forward conversations and fresh relationships.

SMA’s Mark Breading notes that cooperation has always been the focus of existing communication systems and business processes.

In Beyond and Insurance 2020 report generated, PWC analysts reportedly stress that as soon as insurers bring in their best ideas into practical strategies. It becomes very significant  to determine methods to target people through various channels and messages, simplify product design, and effectively re-engineer product economics and distribution. Further considerations involve methods to reshape the process of underwriting to capitalize sensor information and new analytics. It also includes steps to make the process of policy and sales administrations real-time and straightforward.

In an insurance industry, collaboration and crowdsourcing can deliver the required intelligence to draft determinations. Opening the broad possibility of crowd usage is a great step.

Something for All

Peer-to-peer insurance is the best choice for individuals belonging to unsupported markets. Moreover, it allows coverage for gigs in the collaborative economy. As most of the budding startups act as brokers, the startups for insurance carrier still remain to be forthcoming in the world of insurance. There are several corporations coming up for specialized insurance. This includes insuring pet owners to let’s say, cyclists. It simply feels ridiculous. Imagine a cyclist insuring his bicycle. Well, we may have laughed at the notion previously, but considering the sudden emergence of crowdsourced insurance companies, it’s very much possible.

Author
Carrie Ann is Editor-in-Chief at Industry Leaders Magazine, based in Las Vegas. Carrie covers technology, trends, marketing, brands, productivity, and leadership. When she isn’t writing she prefers reading. She loves reading books and articles on business, economics, corporate law, luxury products, artificial intelligence, and latest technology. She’s keen on political discussions and shares an undying passion for gadgets. Follow Carrie Ann on Twitter, Facebook & Google.

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