How Initio’s technology is redefining house insurance.
There’s a new item to add to a checklist when buying a property: risk. As the insurance industry has shifted toward risk-based pricing, it’s become increasingly expensive to insure homes in flood-prone, earthquake and storm-surge areas.
“As well as rising insurance costs, house insurability will have an impact on banks’ ability to lend to homeowners, and this can ultimately affect house prices,” says Rene Swindley, CEO and founder of innovative and technology-leading house insurance provider Initio.
“Landlords have been asking us to use our data to help identify the riskiest properties in their portfolios so they can sell the most problematic ones first,” Swindley says. “If you’re looking at buying a house, the very first question you should ask is ‘What’s my risk?’.”
Initio’s technology platform underpins its disruptive approach to the New Zealand insurance market. The unique combination of data inputs, painstakingly gathered over time, permits fast and easy access to house insurance. Fundamentally, the approach allows Initio’s customers to make better quality data-driven decisions.
“Our award-winning technology does all the heavy lifting to make our platform the simplest, fastest, easiest house insurance website in the country,” says Swindley. “We have gathered data for, and mapped, almost every property in New Zealand using our in-house developed technology.
“This means we can quote a property in five seconds and, in most cases, insure it in less than two minutes. We recently commissioned a competitor analysis that shows some of the biggest insurance brands in New Zealand will collect vast amounts of personal information by making customers answer over 25 questions before they show you a quote.”
When it comes to claim time, Initio’s ‘Smart Claims’ technology means that the process of making a claim is easy and transparent. The claims experience was recently recognised as a winner in the 2024 Canstar Innovation Excellence Awards.
In the past, the only key metrics an insurer wanted to know was a home’s size, its region and when it was built. Insurance was a cross-subsidised, community-based model, so those in low-risk areas were effectively paying more so those in high-risk areas could pay less. The 2011 Christchurch earthquakes were a pivotal event – and now the industry has moved strongly toward a pure risk-based, user-pays model.
“The $1 million 1920s villa could cost you four times more to insure in Wellington than it would if it was in Hamilton,” says Swindley. “The change has been pretty transformative and, in some cases, homeowners are seeing massive changes to their household running costs”.
His advice to homeowners is threefold. First, budget for increasing insurance costs because risk-based pricing is likely to affect you. Second, when buying a property think about risk and insurability. Third, reconsider your tolerance to risk and consider a higher excess, if you could handle a $2,000 excess, for example, this could help reduce your annual insurance costs.
Saving money on policies
What happens if there is a frighteningly large increase in premiums?
“My top tip for someone facing an unaffordable insurance bill is to consider your options; maybe there is a provider that takes a different approach to risk and is easier to deal with,” says Swindley.
“Secondly, always make sure you get your house sum insured right and by this, I mean the total cost to rebuild. You are then in a position to insure for the big stuff – and forget the small things,” says Swindley. “Pretty much every house insurance policy in New Zealand provides cover for the big events, the total loss house fire or the flood.
“That means that a lot of insurance providers are competing on the little bells and whistles, and in most cases, can opt out of them by taking a large excess.”
It’s worth shopping around. An insurance quote can be obtained online from Initio in a matter of seconds (without providing an email address or phone number, so they won’t be following up to apply the “hard sell”). Swindley says that its digital-by-default, human-support-when-you-need-it approach, coupled with the property data insights, allow Initio to be more efficient than competitors. That also helps to keep premium costs down for customers.
“With starting home insurance and making a claim, we’re trying to provide as much certainty as possible to customers, because we hear a lot of horror stories about how disappointed and uncertain people are after dealing with their insurance. Hopefully we can help people understand it doesn’t have to be like that.”
Swindley says “over the last 12 years they have been laser-focused on building an insurance provider customers can love.”
Claim time is when it matters
While data improves the customer experience when obtaining cover, claim time is when insurance really matters, and this is where Initio is truly different. A recent example was the 2023 Anniversary Weekend flooding in Auckland. During the event, Initio was able to map NIWA data, highlighting flooded areas of the city against the locations of the properties it insured – and proactively support homeowners before they had even made a claim.
Currently, Initio is developing its technology to pay certain types of claims in a matter of seconds. Swindley says: “Our goal is to create the most efficient claims experience on the planet. For us, this is the single most important thing because we know that it’s at claim time our customers most value their insurance.”
As the impact of climate change continues to drive extreme weather events, insurance premiums will almost certainly continue to change, he says.
“We like to think our customers are smarter and make better quality decisions faster because we give the knowledge, tools and autonomy to manage their risk,” says Swindley. “If you are not ready for a super smart, data-driven digital insurance experience then you are probably not ready for Initio.”
For more information: initio.co.nz