A recent conversation crystallized a thought that has been rattling around in my brain for a while: that, despite the industry orthodoxy, insurance is no longer "sold, not bought."
The reverse isn't yet true, either. It isn't correct to say that insurance is bought, not sold. Instead, we're in a middle ground, where insurance is both sold and bought. People certainly still rely on advice about insurance, and a good agent can spot a need and fill it with a policy, but a huge percentage of people now begin their searches online. They also do more and more research on their own, out of reach of brochures and PowerPoint presentations. With COVID accelerating the move to digital, customers often won't even sit down in person with an agent before buying a policy.
Yes, "sold AND bought" is confusing -- but this situation also creates opportunities for those who are first to adapt to the new reality.
The conversation that pulled the thought together for me was with Amy Radin, a longtime senior executive at Fortune 500 companies in financial services, including American Express, Citi and, most recently, Axa, where she was chief marketing officer. Amy has added "author" to her resume, publishing a book on how to produce disruptive change in big organizations, and now consults to both big corporations and insurance startups. She spoke with me for a webinar as part of this month's ITL Focus on strategic innovation and brought up agents' "Uncle Joe" issue.
"Even with someone who has bought an extremely high-end policy, they're investigating their options. They're talking to neighbors. They're talking to their Uncle Joe, who is very successful, so they respect his opinion. They're talking to people who lead lives like theirs," Amy said, based on customer journey research she has done or commissioned over the years. "Customers will tell you they went through an investigative process that has nothing to do with anybody who's licensed by the regulators to sell insurance."
She added: "Most policy holders would be offended to hear that the industry views them as being sold to. I doubt any of them will tell you, I just called my agent and said, Tell me what to do."
The "sold, not bought" notion will, I believe, increasingly limit innovation, because it will keep executives focused on the products and on tools for agents rather than on how people's needs are changing in these turbulent times.
Her recommendation: "Go out and listen to your customers. Don't hire a market research firm. Don't rely on surveys. Sit down with a handful of people who are giving you their money and understand what's changed in their lives."
She cite a Harvard Business Review article by Michael Porter that said only 3% of executives actually go out to interview customers -- even as the executives preach the need to be "customer-centric."
"Ask: How am I to do business with? Tell me about that policy you bought? How did you decide what to buy? Who did you consult?
"Don't do this in the context of trying to sell the product. And don't just ask about rational needs. Ask about emotional needs. How are they feeling -- not just what are they doing? Insurance is a product that's pretty fraught with emotions."
She cites an experience she had understanding an emotional need while at Citi, where she was an EVP and chief innovation officer in the U.S. credit card business from 2000 to 2009. During the Great Recession, all sorts of people fell behind on payments, which traditionally would have meant launching a barrage of calls to browbeat delinquent customers. But Amy suspected that many would appreciate a digital experience, so they could negotiate terms and make payments without being shamed by another person.
"It's very emotional to be in collections," she said.
She eventually got to run a test, which found both that customers appreciated the digital option and that Citi profited financially.
"The digital experience is now standard practice in that business globally," Amy said.
Insurance sales are unusually complex because, as Amy put it, "Nobody is getting out of bed in the morning saying, I'm dying to get another insurance policy."
But a challenge creates an opportunity. Some companies are responding by embedding insurance into other sales, to make an offer to people in a time of need -- auto insurance when they buy a car, renters insurance when they sign a lease, etc. Other insurers are trying to fit into the new buying process and make sure that prospects will come across them while doing their research online. Many are trying to clean up their interactions with customers, using chatbots to speed routine inquiries, implementing omni-channel approaches so that someone who begins a conversation with an agent or company via a website can easily pick it up via text message, etc.
Yet those moves feel like just the beginning. Whoever first figures out the new "insurance is sold and bought and sold and bought..." paradigm will create a more collaborative model that will delight customers -- and bring a lot of them into that company's fold.
P.S. Here are the six articles I'd like to highlight from the past week:
There will always be a need for intermediaries who deeply understand customer needs and can create that right combination of coverages.
One study found that 50% of those infected were unable to work full-time six months after recovering.
If we can reduce, standardize or eliminate costs associated with litigation, the industry would be in a much better position. AI offers an answer.
Insurers must be flexible, to understand what kinds of integrations would be most valuable to agents.
Selling life insurance to digital native consumers requires an omnichannel approach, regardless of what you consider your primary sales channel.
Four years ago, almost no large companies were thinking about the impact of climate change on their businesses. Finally, many are.