NewTech Friday: Verna – Shaking up Iceland’s car insurance industry
Verna was born out of a need for change in the historically conservative and stagnant motor insurance market in Iceland. Its CEO, Fridrik Thor Snorrason, takes us on a journey from the inception of Verna to its groundbreaking solutions and vision for a greener, more customer-centric future.
Verna was born out of a need for change in the historically conservative and stagnant motor insurance market in Iceland. Its CEO, Fridrik Thor Snorrason, takes us on a journey from the inception of Verna to its groundbreaking solutions and vision for a greener, more customer-centric future.
What led to the creation of Verna?
The motor insurance market in Iceland has historically been conservative and stagnant, with cover on offer ambiguous, pricing unfair and transparency limited. Consumers are assigned to a ‘class’ where all within the same ‘class’ are charged the same rate, regardless of driving performance. There is a weak link between performance and price, and the incentive to improve driving performance is very limited. With new technology and increased market awareness, there is a growing demand by drivers to get rewarded for good driving performance. In other words, consumers are desperate for change.
Verna was created to address this need for drastic change. Our mission is to develop smart insurance solutions that incentivize cooperation, risk reduction and improved well-being of customers. In April 2022, we launched the Verna Digital Motor Insurance product in the Icelandic market for private vehicles. The product has been well received by Icelandic drivers and our market share is now approaching 3% after less than a year and a half in the market, which is probably a world record! The customer base is growing by 7-25% per month and forecasts assume a market share of around 3.5% by year-end 2023.
Could you present Verna‘s offer?
We at Verna believe in the core purpose of insurance – that you have a backup in case of a loss incident. At the same time, insurers face increased challenges, with customers demanding more clarity and the chance to impact their prices with risk-reducing actions. Verna wants to address these challenges by creating solutions that go beyond providing protection. The Verna Digital Motor Insurance product combines telematics with an ecosystem of services that help customers to use their cars on a daily basis.
Firstly, the solution is 100% app-based and designed to make onboarding and the overall customer journey as user-friendly as possible. Telematics data is collected using standard sensors that are in all smartphones. There is no need for beacons installed in the car, the smartphone is all you need. With the Verna app, customers pay monthly premiums that change with driving behavior. Good drivers receive a significant discount. Secondly, the app has an in-built ecosystem of services that help them to use their car. For example, pay for parking, an interactive map with gas prices and charging stations in the area, offers for car wash, and emergency services. This approach changes the motor insurance product from being a low-touch product, where most customers only interact with their insurers once a year, to a product that creates value for the customer several times a month and even on a daily basis.
What‘s coming next for Verna?
Research shows that smoother driving can reduce CO2 emissions by 5-20%. The Verna smartphone app uses mobile phone sensors to measure the smoothness of driving (e.g. acceleration and hard braking). We are currently working on a solution that enables our app to quantify the GHG effect of smoother driving and convert the CO2 reduction into carbon credits. These credits have monetary value, will be earned by our drivers and hence should give them strong financial incentives to drive more smoothly. Earned carbon credits can then be used in different ways, for example as year-end premium discounts or credits to pay for services within our ecosystem of value-added services.
The carbon credit solution will enable insurers to play a central role in reducing GHG emissions, since urban transportation accounts for approximately one fifth of GHG emissions in the EU, of which 45% are emitted from passenger vehicles. This is one of the first projects of its kind where consumers will be able to earn and monetize carbon credits from driving more smoothly, while significantly reducing their CO2 footprint. Uniquely the project enables insurers and their customers to jointly contribute to global CO2 emissions reduction goals with smoother driving, and at the same time rewards the user with financial benefits for their positive driving behavior. The plan is to launch this new feature by Q1 2024.
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