Let’s face it: it was only a matter of time before the insurance industry recognized the value and popularity of an ‘as a service’ model.


The tech world has embraced offerings like ‘Software as a Service (SaaS)’ and even ‘Hardware as a Service (HaaS)’ for some time now. Fintech radically transformed the financial world within the past decade through customer centric digital services and continues to do so. The truth is that one size fits all products and models aren’t good enough for most customers anymore.


As our day to day lives become increasingly digital and curated to our needs, it’s logical that individuals look to the companies, brands, and products they trust to follow suit. After all, as our ability to clearly document and communicate our unique experiences and preferences increases, it’s never been easier for companies to tap into what their customers want and react accordingly.


This is where ‘insurance as a service’ comes in. This approach can narrow insurance offerings to target specific customer segments that have common, unique needs and situations. Traditional insurers are beginning to wake up to this new way of selling insurance, but some insurtechs are already there.


We recently sat down with Adam Erlebacher, Co-Founder and CEO of Fabric, an insurtech company offering digital insurance products specifically designed for new parents, to discuss his company’s approach to ‘insurance as a service.’


Insurance as a service, not just a product


Fabric’s story began with two young parents looking to address what they saw as common issues and needs unique to new parents. After you’ve cleared the nearest convenience store (or two) out of diapers and stocked up on more paper towels than you ever thought you’d need, bigger life purchases are up on the chopping block. One of the first things most would assume is on the list is purchasing life insurance.


There are few catalysts in a young person’s life that drive home the need for life insurance quite like becoming a parent. Perhaps when you get married, buy a home, build up significant wealth, life insurance is something you’d think about. But having a child dependent on you immediately drives the point home, or so you’d think. Here are two issues with this assumption.


The first issue is over 50 percent of single parents with children under 18 don’t have life insurance, according to a study by PacWeath Solutions. Additionally, a study by Caring.com found only 36 percent of US parents had an ‘end of life’ plan in place. So, if life insurance is particularly important when you have a child, and the majority of parents aren’t biting, this implies there’s something wrong with the product and/or the way it’s being sold.


The second issue is, even if you do purchase a policy, insurance is a one time purchase, and a particularly low-engagement one at that. So how does Fabric turn what many see as an optional product into a desirable service continuously delivering valuable information and tools new parents are looking for? It starts with the service. This is where Fabric Vault comes in.


The importance of delivering value through customizable offerings


Fabric Vault is a free, digital tool that compiles services and information specifically designed for new parents. This includes a secure digital ‘vault’ that allows parents to share important financial data and organize their finances. Fabric Will allows parents to create a will, both individually or collectively through a ‘mirror will’ feature. Both of these services are available and accessible for free either online or through the Fabric app, regardless of whether or not you have a Fabric life insurance policy.


“Products that link digital products and insurance products are hard to pull off because people don’t want to be thinking about their insurance everyday,” explains Adam. “We’ve created this suite of free digital products that wrap around our core insurance offering. They’re meant to deliver persistent, continuous value to our customers. By delivering value through these free products, we can be there when they need an insurance product.”


The brilliance of this ‘insurance as a service’ approach is twofold. First, it provides valuable, free products that speak to the audience and begin to build a trust-based relationship between customers and Fabric, before introducing the insurance product. Second, Fabric is incredibly intentional about its audience and is therefore able to tailor its services and insurance products quicker and better than larger insurers who cast wider nets.


Knowing when to be tech-forward, and when to be human-forward


Another benefit to the ‘insurance as a service’ approach is the inherent difference between selling a product and providing a service, as well as what this means to customers. Services imply a more complex and scalable relationship than products, which Fabric demonstrates through its use of Fabric Vault. What’s more, Adam explained how the ideas for Fabric Vault and Fabric Wills both came from his and co-founder Steven Surgnier’s personal experiences as new fathers. Using a service approach encouraged them to look to their own experiences to determine what provides the most value for their target audience.


Providing continuous value through services allows a company to develop a more meaningful and personal relationship with customers than your average one-time product sell. This can be particularly significant when you’re dealing with a tech product with the potential to be deeply human and sensitive, like life insurance.


“There’s obviously a place for technology,” says Adam, “It’s knowing when there’s a time in the insurance process, especially during claims, when you don’t want to be technology forward, you want to be human forward.”


Using a service approach to insurance makes personal moments in the insurance process more comfortable and ‘human’ for both insurers and customers.


Being intentional with data


There are also pros to this approach when you’re on the tech-forward side as well. This is incredibly clear when you’re dealing with a large amount of customer data, and few industries have access to the quantity of data life insurers have.


The lack of innovation in policy administration in the life insurance industry (we couldn’t say it more succinctly if we tried, and we did try) is an issue we’ve touched on before. The massive amounts of data collected by incumbent insurers over the decades, or even centuries, makes finding, organizing, and using data incredibly difficult.


Here, the advantage lies with the newer insurers, like Fabric, being incredibly clear and intentional with the way they collect, organize, and use their customer data.


“We don’t have any legacy, and so we can really create that stack of data for exactly how we want to use it and all the data becomes accessible to us,” Adam explains.


The ‘insurance as a service’ approach to data simultaneously encourages customers to provide their data in clear, reasonable ways through services, organizes it, and provides the company with the tools to further customize the core insurance product with that customer’s data.


Whether the ‘as a service’ take on life insurance offerings takes off with incumbent insurers and future insurtechs is something we’ll have to see later down the line. However, customer trends clearly point to a growing demand for customized, accessible, and understandable insurance products, especially with new, younger customers. Introducing insurance as a service and providing value beyond the core insurance product is the perfect way to build a meaningful, trust-based relationship with your customers and to use their data in a way best suited to their needs.


Want to learn more about Fabric’s approach to ‘insurance as a service’? You can view the interview between Montoux’s CEO Geoff Keast and Fabric’s Adam Erlebacher right here.


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