Digital transformation initiatives are accelerating because of the pandemic and the mandate to “go digital.” Even more important are the changing expectations of insureds, particularly millennials, who have grown accustomed to receiving products when, where and how they want them. Even boomers have these very same expectations.
Given that digital technology is driving nearly every major industry, it is a wonder that it has taken so long to garner a foothold in insurance. The simple reason is that the insurance industry didn’t have to. Everyone was on the same page. There was no risk of falling behind.
But that was then, and this is now.
Today, insurers must continuously align with where consumer interest and appetite are tracking, modifying organizations and resources to the quest without losing sight of ease and simplicity. As the insurance sector frantically tries to make up for lost time, those insurers that will win the future will be those that deliver an Amazon-like experience for the customer.
This goal may prove difficult, however, as many incumbent carriers are NOT focused on the customer. Ironically, many multi-line carriers operate as multiple single-line carriers because they do not look at the customer as a channel. A number of industry upstarts, however, have stepped in to fill this void. Lemonade, for example, has been able to expand its portfolio quickly and bundle different policies using modern technology.
By packaging up a suite of insurance products in a simple, comprehensible way, insurers will find themselves in sync with what customers really want: simpler, one-stop shopping, with easy, omnichannel buying journeys. Customers are difficult and expensive to acquire, so retention is all too important. Our research shows that the greater the number of policies a policyholder has with a single insurer, the greater the loyalty and the lower the churn. The more an insurer can meet a consumer’s diverse needs in a simpler way, the more recurring revenue the insurer will derive from each customer – even to the point of becoming their sole insurance provider.
There is a huge opportunity for insurers to design products and solutions that not only protect health, wealth and risks but work with people’s lifestyles to prevent injury or loss and the subsequent claim. For insurance providers to be able to make the most of these opportunities, they must adopt more customer-centric business models – and that means addressing issues with their legacy infrastructures, which were designed for a product-centric approach. The insurance industry of tomorrow will be more than just a product; it will be an experience.
With the technology that has been used by insurers for decades, and even with many modern legacy core systems deployed just a few years ago, it is impossible to add a usage-based or episodic insurance product. It is equally difficult to sell a bundle of different types of insurance products in one go or bundle insurance and non-insurance products to add unique value. Those modern legacy systems were designed for a more traditional era of insurance. They served their purpose for yesterday, but tomorrow will be quite different.
To be competitive in the modern market, insurers must adopt cloud-native, microservices and API-rich insurance platforms. These new technology platforms for the future of insurance, called coretech, bring together the core operational and digital insurance capabilities needed to support emerging business models and leverage insurtech innovation and data for growth in emerging B2B and B2C ecosystems.
At EIS, we have embraced the ecosystem-enabling fundamentals of coretech to help some of the top carriers in the industry, including a 100 year-old bastion looking to transform their antiquated technologies and modernize their processes.
Key decision-makers contemplating a coretech solution must first take a look at their existing business architecture and ask themselves some hard questions, such as: Is it product- or customer-centered? Are we limited by closed-in architecture, lack of application programming interfaces (APIs), or an inability to participate in ecosystems? Can we only sell products that our modern legacy system will allow us to sell?
Upstarts to the industry are the manifestation that change is needed and validation that many carriers are currently failing. A mindset change is what’s needed, and insurtechs, focused entirely on the customer experience, are quickly stepping in to fill the void. All of this disruption is causing insurance companies to quickly reevaluate their infrastructures. Carriers can be fast followers when change can quickly take their business away.
It’s no accident that so many of the businesses we interact with on a daily basis already embody this customer-centric notion, adapting what they do and how they do it to customers’ needs and preferences on a real-time basis. It’s all driven by data, and the massive expansion of our ability to collect, interpret and apply it. Bringing this potential into the heart of the business will align insurers to consumers’ true north – as the obvious choice in a crowded market.
The insurers of the future will be those that enable digital ecosystems that place the customer at the center, and view the customer as the channel so that insurers can offer the products and services that the customer wants, not what a legacy system allows them to sell. Incumbent players have a powerful opportunity to drive the industry forward and bring customers with them.
How many companies do you hear say, “We are customer-centric”? Pretty much all of them, right? To be fair, I can’t imagine many would ever come out and say they are NOT customer-centric. But I rarely believe the claim of being customer-centric. What I think most companies mean is that they are product-centric first, then and only then customer-centric.
That is: What’s in our kit bag that we can sell to you? We as the consumer end up with multiple product (centric) offerings and do the orchestration and administration ourselves. This is the way it’s always been. The average consumer has between 12 and 17 individual insurance products. Think about it: home, motor, pet, life, gadget, protection, health… the list goes on. Then add up the number of people per household. What happens when you have four adults (two parents, two kids): Is that 40 policies? For grudge purchases like insurance, that’s a whole load of grudge! Another way to validate this product-centricity — when you call your insurer and the rep asks you for your policy number before your name!
If we innovate and design products in silos, we create great individual products — but do we miss the big picture?
We create a fragmented and poor end-to-end experience for customers, leaving them to do all the hard work.
We may as well buy products from multiple providers (which in most cases we do). There are very few composite carriers that have got this right (or are moving toward an integrated approach).
We make the problem worse by advertising in the same silos (in the U.K., at least) on our price comparison sites and focus on how long it takes to get cover: home insurance in eight minutes, travel in three and life insurance in three. LV did a study saying we spend more time choosing our annual holiday than we do buying life insurance. That just seems mad to me!
How are we meant to engage with customers or get them to fall in love with what we are offering? We need new methods!
I am a firm believer of falling in love with the things we want. I don’t want:
Auto insurance – I want the ability to drive from place to place.
Buildings insurance. I want the cover I need so that my mortgage company gives me the money to buy a house.
Health insurance – I want the help to stay healthy and out of hospital and so on. You get the idea here.
Partly, this is the move from reactive to preventive capabilities – or at least that’s what we say in the insurance circles. See here for the Great Insurtech Debate that covered some of this.
I LOVE YOU
To help move away from these multiple product silos, the key for me is the addition of some sort of service. Customers actually want more than the insurance product. So give them the same products, this time shielded by a services layer they actually need and engage with.
This service layer would have a number of fundamental impacts, both positive and negative:
greater customer-centricity, as the services layer does the orchestration/administration
less burden on the customer at the product level – makes our lives more convenient and gives us time back
higher number of products per customer for the carrier (usually an important or at least measured metric across the industry — and ranges from 1.1 per customer to six)
may reduce insurance premium written despite being more profitable because of the service revenue
may reduce transparency? Will the regulators like this?
That leaves the new model looking more like this: the service layer getting bigger, the insurance slices shrinking and all the lines blurred between the once product-centric and siloed innovation world. It also means we innovate at the customer level, not the product level. Feels like a WIN WIN WIN.
So What Do These Services Look Like?
There are tons of examples here that can be called up and not just in personal lines. In the same way I pay for uptime on aircraft engines, I can do the same from Hartford Steam Boiler given their IoT acquisitions, with preventive maintenance and servicing vs. buying the policy outright in the first place.
Some initial examples could include:
For insurers, the next question is: Do I need to own those services, or could I just partner with multiple other providers to focus on the right outcome? Think about emergency home repair in your home policy or legal cover on your motor cover. These are still at a product level but not owned by the insurer themselves.
The key question is – What did the customer come out to buy in the first place?
Step out a level and start to aggregate the thinking at the customer (need), level not the (individual) product level.
One of my favorite examples is Peugeot’s Just Add Fuel. It plays to many things for me — from mobility as a service to brilliant orchestration of the end-to-end things you need to drive: servicing, tax, roadside assistance, tires and, of course, insurance. Super-convenient and hassle-free!
I call the Peugeot approach embedded and invisible insurance. Many folks don’t like this term or general principle, asking what happens to all the spending on identity, brand and direct marketing. Will regulators like the approach — is it transparent enough?
The winner will be the most efficient manufacturer. A great example of this is CoverGenius, which is integrating to the commerce level, not making the customer do the swivel chair integration! Hear from Mitch Doust, too, on the InsurTech Insider podcast here on what they are up to and how they enable embedded insurance experiences for their customers.
A great example from another industry on removing barriers for customers comes from Match.com. Any single parents wanting to go on a date get up to three hours babysitting free of charge. Now, I’m not single, but finding a babysitter is nearly impossible where we live.
So let’s assume for one minute that the top half of my customer circle is filled with tens of insurance products that we all have. Now expand to look at the services we engage with on a regular basis and are likely to love as little as insurance. I quickly arrive at utilities and banking, with many lessons and observations that I think can be worked through for insurers, too.
It’s fair to say we love these (read: care as little) as much as we do insurance. It’s pretty much a commodity product with some big legacy incumbents and some startups. Sound familiar? The startups have some unique and interesting propositions, be it great user experience (Bulb is my favorite), 100% renewable energy or something else. There are price comparison sites helping you find the best/cheapest option based on your usage and preferences. But just like insurance, there is a level of inertia that limits people from switching energy providers.
That said, there are a number of things going on here that may, just may, have material impacts for how we engage insurers. Specifically, automatic provider switching!
There’s been a whole host of firms pop up and offer this service. In the U.K., we have Labrador, Flipper, WeFlip and now AutoSergi from the price comparison website giants themselves, plus many others.
With Flipper, you pay a monthly subscription of just £2.50 to automatically flip to lower-cost providers, but it’s free until you have made savings. In the U.S.. you have BillShark, and this is just the tip of the iceberg. The Guardian ran a piece late last year on how we can help people change providers for the best deal, in some cases saving £1,500 per year. There are easily 10-plus players in this space now, although not without challenge. I recall Flipper has been to the brink and back, and, just this month, it’s reported that Labrador has gone bust (here).
Challenges aside, take the idea of auto switching to insurance?
Would most of us actually care if our journey out was insured to a different provider to the journey back, or house insured with provider X one month and a different one the next?
The Final Ingredient in the Cake: Banking
As much as I love all of the new Neo Banks and challenger capabilities such as Starling, Monzo, Yolt, Emma and hundreds of others, my life seems to take place on my credit card.
While I have moved to a Neo Bank (and properly moved, shutting down my old account), it does pretty much what I had before. Yes, maybe with a shinier interface. Yes, in a more engaging way. But I have my money in, and then bills out. It’s not that complicated. What sets my bank apart is the Market Place, which enables access to insurance through a number of providers, as well as many other services and utilities to make use of the open banking and transactional data.
Another New Bank, Monzo, which could be valued at $2 billion if the latest rumored raise is correct, has an iconic following for its Hot Coral card. The more than 1.5 million customers give Monzo an opportunity to service this customer base with more than just banking. In a recent blog, Monzo talked about services that could be added: bill switching, clearer fair insurance and much more.
With All These Ingredients, How Do We Make Cake?
Many all-in-one services already exist. One of my favorites is Onedox, which wraps all of the above into a single service and has a website and app that allow you to add:
household bills, including broadband, media, phone, streaming services
other stuff, like when my mortgage is due, my TV license, my local council tax and much more
having all the bills (pdfs) downloaded to one place without me having to log in anywhere else
I can add multiple providers, I get one-click energy switching and a neat app to store all this stuff in one place, rather than log into my separate providers and accounts.
Keep going. Add insurance providers (below) and soon insight through open banking. See here for the vision on that particular one.
I find Onedox super helpful and already notice behavior changes, in that I don’t need to go to any of the other providers. Youtility is another that was recently featured in the national press.
So, who will own the customer of the future?
We want our time back. Period. For insurers, this means that we can no longer offer something people can’t fall in love with, or want last in the chain of thoughts. We have to find ways to blur the lines. Why can’t insurers take the front foot on this one, creating and orchestrating partnerships that add value?
I have a few key questions that keep coming up again and again:
When is insurance not insurance? Will we focus on the service, not the underlying cover?
Who will own the customer of the future? Is it the utility, bank or insurance company?
What other industries have done a great job at orchestrating their own and other services into a single, convenient marketplace or offering?
How does the U.K. market differ from Central Europe, the U.S. or Asia?
Is there a combined service you would subscribe to if offered?
I can summarize this story in five points:
Value-added services blur the lines between product silos, changing the premium and profit mix for carriers.
Insurance can become embedded and invisible in the underlying service.
As services move beyond insurance only, there are plenty of ingredients, but we eat cake!
Watch out for open banking and utility switching — if they win the race, where does that leave us?
The change is happening already.
Ultimately, there is no point serving customers all the individual ingredients and saying, go make it yourself. They really just want cake!
As always, would love your thoughts, builds, challenges on this.
Customer experience experts are in typical year-end prediction mode. But our crystal ball came up with a bit of a different take on what’s in store for next year.
It’s that time again, when all the management gurus come out with their customer experience predictions for the coming year.
So what customer experience trends do the gurus foresee in 2019? What do they predict organizations will focus on? Here’s a sampling of their ideas, culled from some recently released prediction lists:
Companies will create more customer-centric cultures, using new recognition systems and training programs.
Companies will use technology to digitally transform the customer experience.
Companies will go the extra mile by empowering their employees to surprise and delight.
Companies will use robotic process automation to speed customer transactions.
Companies will leverage AI to automate customer interactions without making them feel mechanical.
Companies will break down silos and align customer experience strategies across functional domains.
Companies will use predictive analytics to create more personalized customer experience.
Companies will overhaul their voice-of-the-customer programs, relying more on text analytics of unstructured content, such as survey comments, call center recordings, social media conversations and online chat sessions.
It all sounds like wishful thinking to me – or perhaps just some firms trying to promote their products and services under the guise of supposed customer experience predictions.
Call me a cynic, but here’s my bold customer experience prediction for most companies in the coming year: Not much will change.
Most organizations will lumber along, spinning their wheels on this topic, discussing it endlessly, executing on minor improvements that amount to window dressing, just so someone can “check the box” on the next performance review.
Most organizations will continue their navel-gazing, focusing inward on organizational changes, role shifts, political infighting and silo strife.
Most organizations will lose whatever little momentum they may have gained around customer experience improvement, as top executives with organizational attention deficit disorder spot some shiny new object that becomes the next initiative du jour.
Forgive my pessimism, folks, but most organizations are unremarkable and are destined to stay that way. That’s precisely why, when a company actually does break from the pack and deliver a differentiated experience, it turns heads.
So, rather than obsess over what everyone else will be doing (or what the gurus say everyone else will be doing), focus instead on what your company can do to avoid the fate of mediocrity.
Think about how to send a clear, unmistakable signal to the marketplace — and your workplace — that something fundamental is changing.
A signal that you’re no longer going to do it “like we’ve always done it.”
A signal that you’re disrupting the status quo in your industry.
A signal that you’re liberating consumers from long-simmering frustrations.
A signal that you’re dispensing with the typical customer experience platitudes, in favor of very tangible and compelling changes that make a difference in the lives of your customers and the employees who serve them.
If, at the end of 2019, you don’t want to be among the many companies that validate my bold prediction, well then… go do something bold!
You can find the article originally published here.
The following is an excerpt from, “How Customers Buy, & Why They Don’t: Mapping & Managing the Buying Journey DNA.”
I can assure you that this is not another sales process book. It is rather a book of uncovering and decoding an enigma that plagues too many commercial organizations. It introduces a concept I have developed and named Outside-In Revenue Generation. This concept posits that instead of focusing on their own internal view of how to position and sell their offerings, companies must look to the external reality of how their customers actually buy.
It is important to realize, and what is in fact the underlying foundation of this book, how Outside-In Revenue Generation differs from the much-used (to the point of clichéd) notion of “customer-centric” marketing techniques. For decades, it has been touted that commercial enterprises can gain the world by being customer-oriented. This probably started with the wise idea that customer satisfaction differentiates one provider from another. From that starting point, few functions of organizations have been left untouched by the movement to consider the customer. From R&D to after-sales service, organizations have adopted more customer-oriented approaches and processes, and no doubt this represents sound thinking. And I’m not suggesting that business initiatives that put a priority on the customer don’t yield results. They should, and they do, but they could be doing so much more.
I must say that more recently I have heard people starting to talk about the buying process and buying journey. However, when I dig a little deeper, what I really see and hear are the selling organizations’ thoughts (and hopes and prayers) about what the customer is doing or, more precisely, what the seller would like the customer to be doing. A vendor-centric buying process, if you will. In some cases, I have even seen organizations take their own sales processes and graft on what they imagine or wish their customers would do at each step.
Although somewhat laudable, these attempts to define the customer buying journey from the selling point of view have proven to be myopic. They look no further into the customer’s world than laying out the hoped-for reactions that result from their own sales and marketing actions. I call this an inside-out approach because it centers internally on the selling company, its offerings and its own sales and marketing initiatives.
This all seemed okay to me until we talked to hundreds of customers about how they buy. It was only by going behind the scenes of the buying process that I found the truth. The Outside-In approach has nothing to do with imagining what customers should do when you sell to them; it defines precisely what customers will do when they are engaged in a buying journey. Our research has proven again and again that a clear and perilous dichotomy exists between these two ways of thinking about how customers actually buy.
The basis of Outside-in Revenue Generation is founded on decoding the “DNA” of the target market’s buying process, which then allows us to ultimately map the entire customer buying journey. It lays out exactly how the supplier can apply that DNA mapping to understand how customers will buy a specific offering and what may cause them to hesitate or stop in their overall buying journey. Perhaps for the first time, we fully reveal and discuss how and why customers don’t buy in the manner sales organizations would like them to. Because they certainly don’t follow a buying journey that echoes any sales process I have ever seen.
Traditional ways in which to look at the equation of creating customers have simply been too superficial. They may have worked in the past, but in today’s world where customers have unprecedented access to information, where customers are faced with an endless spectrum of offerings, where decisions are no longer made by a single decision maker but by a dynamic network of decision influencers, traditional approaches fall very short of the mark.
Arthur “Red” Motley famously said, “Nothing happens until somebody sells something.” Many, including me, have embraced this as a business mantra. But I suggest that we tip this on its head and change it to “Nothing happens until somebody buys something.” Perhaps that sounds a bit chicken-and-egg-ish, but I would maintain that the implications of this mirror inversion of thinking are far from simple and do merit attention. Organization after organization believes the path to sales excellence is to design, implement and manage a great sales process. However, I now realize that no one buys anything because of a sales process. Customers only buy because of their own buying journey.
I must make one thing very clear. In flipping Motley’s comment, I do not for one moment want to leave any impression that sales and marketing and indeed salespeople themselves have any less of a role. In any situation other than selling truly commoditized offerings, the salesperson plays as important a role as ever. What I am suggesting though is that, by understanding the customer buying journey, companies can then develop an overall market engagement strategy. This results in an approach that is exponentially more logical and focused than simply turning a sales force loose armed with little more than product information, value propositions and “a smile and a shoeshine.”
One of the most enlightening results that our research turned up was finding that buyers within a target market for a specific offering will behave in remarkably similar ways. This meant that we could decode the DNA of that specific journey and then map the complete customer buying journey for that target market. By mapping the buying journey DNA and discovering what is really going on behind the scenes of the buying process, we could see how many organizations were woefully unprepared to engage in creating and keeping a customer.
It is also maddeningly ironic to see so many organizations diligently operating and investing in all their other business functions. The vast majority of businesses invariably show constant and careful attention in their manufacturing, operations, finance, distribution and research activities. But when it comes to creating a customer—that is, sales and marketing—they are anything but deliberate and mindful. Perhaps it is because sales functions are often viewed more as an art—often a black art, by non-sales folks—than a science.
The underlying malaise, however, is the mistaken logic that the customer will buy the offering based on the seller’s belief in its inherent value while paying scant attention to the buyer’s wants, needs and the real world in which they exist. Throughout the course of this book, I will show how faulty this logic is and consequently how incomplete and wasteful most sales and marketing investments have become. As you will see, the secret to understanding business success in any market lies in closely mapping the target market’s end-to-end customer buying journey. Anyone charged with conducting business must fully understand what it takes to create and keep a customer, and, in today’s world, that means far more than providing a superior offering.
“How Customers Buy, & Why They Don’t” is based on many years of research and analysis into how customers really buy. I wrote it to help those concerned with revenue generation and to uncover what they need to move a customer into a buying journey through all the steps to the acquisition and successful adoption of a particular offering. With this book, organizations, probably for the first time, can have a navigation system by which to design and implement truly effective sales and marketing endeavors that will lead to a predictable, scalable and consistent approach to creating and keeping customers.
Most insurance businesses realize that there are benefits offered by upgrading legacy systems and becoming more “tech-forward.” However, not all insurance businesses are prepared to make the leap.
Here are four qualities your insurance business needs if you want to succeed in leveraging what insurtech has to offer.
Customers are at the center of every business, and insurance is no exception. Being consumed with your customers to the point that you fully understand and anticipate their expectations will make leveraging insurtech a much more seamless process.
Many insurtech solutions are designed to assist with customer interactions and bilateral communications. Some are even leveraging artificial intelligence to enable more personalized, more scalable coverage solutions.
Despite the allure of insurtech, it doesn’t deliver a set-it-and-forget-it solution. It can’t. If your insurance business is not in touch with your customer base to begin with, you’ll have trouble discerning where the use of automation and insight technologies makes sense and where it doesn’t.
Moving to a customer-centric approach begins with realizing that there is no “average” customer. Customers have different behaviors and preferences, and, by truly understanding them, you’ll be able to overcome the false appeal of a one-size-fits-all approach and successfully, that is intelligently, implement insurtech within your business.
It’s critical that you have a firm grasp of your customers’ transactional preferences. In what situations do they expect and prefer to have frictionless, humanless interactions? In what situations do they expect and prefer to have someone to work with? The answers to those questions will differ considerably depending on the customer. Without the answers, even the best AI or automation tools will have a limited or even negative effect on your overall business.
A profound knowledge of your customers and their preferences is fundamental to knowing where and when to intelligently apply and effectively leverage insurtech. At the end of the day,
“insurtech” is a portmanteau of “insurance” and “technology.” It’s about adding new technology to the world of insurance, not about replacing the insurance world with the technology world. As such, it’s important that you use technology in a way that complements your operations.
When it comes to insurtech, for best results you should be using it while drawing on the wealth of insurance world knowledge and experience you’ve acquired. That’s especially true when it comes to insurtech applications that interface with or pertain to your customers.
Being adept at critical or analytical thinking goes a long way when leveraging insurtech. Many insurtech solutions revolve around the same basic idea: Improve data capture, automate the information collection process and apply it everywhere. That means that if you’re investing in insurtech, you’re probably already drowning in data or will be soon.
Data is great, make no mistake. But data without context or — worse — data that’s analyzed and interpreted without discipline or scientific understanding can be harmful. Misinterpreting your data, looking in the wrong places for insights or letting the data collect dust because of uncertainty as to how it should be tackled are common problems. Acting confidently on bad data interpretations can be particularly destructive. It’s imperative, therefore, that you’re able to intelligently interpret and action your data.
It’s important that you approach the data generated from insurtech solutions holistically. A holistic approach to data is one that avoids reverse-causal conclusions, understands and satisfies the demands of statistical significance, accounts for sampling errors and examines patterns with a broad perspective. Key to this is employing properly trained professionals where necessary, assuming a longitudinal point of view and being hypervigilant about duly contextualizing all data sets.
For example, consider a new insurance agent who brings in five new applications worth a total of $50,000. Is this agent suddenly a top producer? Perhaps, but it’s important to look at data over time to see how renewals and persistency pan out. If the agent cannot retain business, then new applications and new business do not necessarily mean increased long-term (and in some cases even short-term) profit.
Another example might be a client who has recently purchased several insurance policies following a marketing campaign. Did the client buy because of the campaign, or was he already in the market for insurance and would have purchased anyway?
In both cases, it’s easy to confuse correlation with causation.
3. Swift Action
The insurance business is notoriously slow to change existing processes and procedures. For example, the prevalent agency model for insurance policy sales and management in the U.S. hasn’t changed much since the 1970s. In fact, it has been criticized since that time in academic literature for being outmoded and a costly way to sell insurance to the general public.
Today’s insurance businesses need to act quicker. Acting swiftly and intelligently will drive down costs, improve profitability and better set you up to leverage insurtech. Many insurtech applications rapidly collect and deliver data; however, your insurance business needs to be able to act swiftly on that data to capitalize on it before it goes stale.
For example, a client who just opened a business needs liability insurance now, not a month from now. Having that data at your fingertips is wonderful… so long as you act on it. Having a quick-twitch motor and a matching mentality is crucial to fully leveraging insurtech. You need to be always on and always ready to act if you expect to succeed in this age of disruption.
Aside from hiring the right people — fit for sudden and decisive action — and properly training them how to act and with what triggers, one way to ensure swift action is by automating clerical activities. Time-consuming tasks such as manually filling out forms, document drafting, scanning, faxing and playing signature tag with customers are all examples of activities that needlessly take up too much precious time in insurance businesses.
Turning to intelligent management systems that automate these tedious processes will cut out a lot of the red tape and remove some of the most common barriers to acting more swiftly. This should free your time and that of your employees to focus on bigger picture activities, such as leveraging insurtech to its fullest potential and making your business thrive.
One of the hardest things for insurance businesses to do is break out of the mold they’re cast in. They suffer from a frame of reference fallacy, wherein they cannot see beyond the strictures of their immediate environment and their own experiences. Not looking (or thinking) “outside the box” makes the industry vulnerable to disruptive business models.
Lemonade, for example, disrupted the insurance industry by offering homeowners and renters insurance coverage powered by artificial intelligence and behavioral economics. By doing away with brokers and unnecessarily long and bureaucratic procedures, they’re able to offer an instant digital alternative to traditional insurance purchasing.
They were only able to do this, of course, because so many in their industry failed to see how new technology, new consumer expectations, and a new business normal pertained to insurance. Most companies lack the vision to connect even obvious dots if they’ve never before been connected. Don’t be most companies!
Being open-minded and willing to try alternative methods is a must for leveraging insurtech. When you don’t acknowledge your limited frame of reference as a vision block and make a concerted effort to overcome it, you can be unnecessarily boxing yourself in and handcuffing your growth potential.
If you’re afraid of jeopardizing what’s already working, you won’t be able to successfully leverage new insurtech tools and techniques. The question of course is whether “working” is a relative or absolute term. If your current approach is producing 2% growth, that’s great, but how do you know that an augmented approach wouldn’t produce 20% growth?
What’s more, the insurance industry is increasingly moving toward a digital model. So much so that soon just keeping up with the times will require you to remain open-minded to radical change. According to a report from Accenture, for example, 47% of surveyed respondents would rather have more online interactions with their insurance companies and 49% have already purchased a policy online with 41% of respondents purchased on a mobile device. The business is changing, and if you don’t change right along with it you’ll likely go the way of the dodo bird.
Now, more than ever, the insurance industry needs to leverage insurtech. Disruptive startups will continue to set the pace in the insurance industry until older companies manage to learn new tricks as they look to more intelligently leverage digital technologies.
Being open-minded, acting swiftly, taking a holistic approach to data and gaining an in-depth understanding of your customers is critical to being able to leverage insurtech successfully. Make it a point to adopt these four qualities and give your insurance business the best chance to grow.