In this post, you can read about Cristo Casco's insurance background, our acquired license as a managing general agent and what this means for us to provide the best possible service to our customers with the insurance available in the app.
To summarise (if you just want to get to the point):
Uniqa Liechtenstein will provide the stable backend of our casco insurance in the future, but everything will be outsourced to us, which means that you will now also find our customer-centric approach, efficient and fast processes, which you are used to with other services in the Cristo app, in casco insurance. We have a flexible backend to build on the feedback of our users, which means that in the future we can tailor the product to everyone's satisfaction. Simply put: we will be able to work like an insurer, but in a more flexible and friendly way, while you can be sure that your claim will be paid, because the financial backing is provided by Uniqa Liechtenstein.
Difference between existing casco operation vs digital lead agent role
From the very beginning, a usage-based casco insurance was available in Cristo, with the backing of one of the largest national insurers. The product was run (underwriting, premiums and registration) by the Cristo team, but in a traditional agency operation, with pricing, underwriting and claims handling developed by the insurer, and administrative processes in the background. This type of approach made it difficult in many respects to design and hone the product flexibly and to maintain it as a competitive offering on an ongoing basis. Modifying the product, fine-tuning pricing could not work flexibly, and in addition, the product was based on the existing casco product, which only allowed for compromise in innovation. In addition, this cooperation only created the background for the domestic market, there was no possibility of launching on the international market.
As a digital MGA in the new operation, we were able to develop the pricing, terms, underwriting principles and operations of the product, which were approved by our insurance partner, who bears the business risk. We will manage and oversee the entire back-end of the product, from underwriting, contract registration and premium management to claims settlement. This flexible collaboration will give us the opportunity to develop and optimise efficient processes, fine-tune pricing based on data, assess individual risk and modify the product. In addition, once licensed, we will be able to start our insurance business in any country within the EU, Liechtenstein and Switzerland without the need for a separate licensing procedure, following only one supervisory notification.
Who will be the new partner? What can you know about him?
After 1.5 years of looking for a partner, we found the ideal one to enable the kind of operation we've always wanted. We work together in a very flexible way, with little say in the product and operations, especially in creating the right insurance backing, with simple processes and quick negotiations, as a startup would normally want to work with others.
Uniqa Group was the first large insurer to recognise that the easiest way to grow and compete with digital challenges in the future, in many product and innovation areas, is to create an organisation (subsidiary) whose purpose is to provide the insurance backing behind innovative solutions. In creating this backbone, it creates a very "flat" organisational structure, open backend system and processes that are easy to work with for startups used to dynamic operations. This is the organisational unit that Uniqa Liechtenstein has set up and has been running for a few years now, working with 4-5 startups.
What did you have to jump through to get such cooperation and permission?
The first, and perhaps biggest, task was to show them our business concept and our potential, so that they could see that it was worth their time and effort. After that we had to go through a due diligence process to make sure that we would be able to do everything properly, because by outsourcing everything to us Uniqa Liechtenstein has to be sure of that. For the licensing process, we had to prepare and submit a lot of documentation to the Liechtenstein Regulatory Authority (FMA), proving that we would be able to comply with all legal requirements in our operations. The whole process took 1 year and a lot of work.
What will be different about the new casco product that could make it a big success?
There are a few areas that we have researched in the past year, and we have also listened to feedback from our users. We have developed the new casco product structure with a commissioned product developer/actuary.
Some of the findings we had to pay attention to:
people are not aware of how far they travel in time, but they are more aware of how many kilometres they use their car each year
the average domestic car mileage is 16 000 km, but many people use their cars for less than 10 000 km
56% of the respondents indicated that they would take out a usage-based casco insurance with mileage-based settlement.
65% of respondents in the EU would take out casco insurance that is better adapted to their car use habits
there is also a strong demand for partial cover for theft and physical damage
The most important changes are as follows:
1.) The product will be available in two different packages.
Stay package will cover damage while parked except for breakage. The car will be protected against elementary damage, theft, robbery and vandalism. The Stay package will not require a Pro subscription, anyone can subscribe and will pay a daily fee.
Full cover will be available with the Move package, which will require a Pro subscription, i.e. Beat usage, to get clear and reliable data on how much km someone is on the road. With a Move package, a km charge will be added to the 'base' Stay package.
2) We are moving from time-based to mileage-based billing. And in terms of pricing, we have tried to offer the cheapest deal in all segments for cars used less than 12 000 km per year.
3) There will be no charging by drivers age, only surcharges for the most dangerous drivers under 23. This way, we will have a very good rate for drivers aged 24-40 compared to the competition. (If you decide in the settings that drivers under the age of 23 cannot drive your car, but in the event of damage, it turns out that the driver was under 23, the deductible payable during the repair will double from the original deductible!)
4) There will be only one HUF deductible, so it will be easier to calculate what the customer will have to pay in case of a claim (no % deductible)
The product will be very fair on many points and the service will be innovative and convenient. In the latter case, we will be able to make a payout within 1 day to the customer's registered bank card for minor claims, using Mastercard Payout, the first of its kind in the domestic market. And if someone needs a repair, through our partner, we will collect the car from them at the time and date specified by the customer and get it back repaired within a few days, so the customer will not have the burden of finding and booking a service, but of course if they want to do it, they will have the option to do it.
In summary
The MGA licence gives us a huge opportunity to bring something truly innovative to the domestic and international insurance market, and to do so in a flexible way. In addition, it opens up the possibility to later implement other insurance products that will be able to disrupt the current motor insurance market in a data-driven way. When it comes to insurance, we can finally take our destiny into our own hands.