Tag Archives: gamification

‘It’s Life, Jim, but Not As We Know It’ (Part 2)

The article below has been based on a keynote presentation delivered at the Euro Events Life Insurance and Pensions Conference in Amsterdam on Nov. 16 2017. This is part 2. Part 1 can be found here.

Summary of Part 1

Most customers do not buy insurance because they like it. They buy it because they have to. This makes it difficult for providers to develop engaged and happy clients. The question is: Can you make the process of buying insurance something that customers actively engage in? Can investing in a pension become an urgent, relevant, integral part of our daily life? Can long-term financial planning become as quick and easy as shopping online?

The answer is yes, but…. there are some important changes for insurers to make.

Insurers need to offer a broader, more relevant solution–with insurance as a component. Examples included integrated solutions for risk management and safety, health, housing, mobility or personal financial planning. In this scenario, insurers can become participants in an extended customer and supplier ecosystem and offer integrated solutions with higher customer engagement.

Part 2: Reconnecting with your customers

In this second part, we focus on the challenge of how to reconnect with your customers – a key to transforming insurance into an urgent, relevant and sexy product.

After the 2015 pension liberation in the U.K., some retirees could not handle their new financial freedom. There are even some reports that retirees were taking their newly available pension savings straight to the casino! Obviously, this was not the intended consequence of giving people more freedom in spending their pension money.

See also: This Is Not Your Father’s Life Insurance  

So how can you avoid these kinds of unwanted scenarios? How can you help your customers with highly complex financial products that may be not immediately relevant and often are without a direct benefit? It is not about giving freedom; it is about helping your customers make smart choices. Unfortunately, that is not as easy as it sounds. There is still a big engagement gap between insurers and their clients.

What are the key challenges we have to overcome to close this gap and reconnect with our customers? We are going to take a psychological view on this and touch on a number of key concepts.

The Theory of Planned Behavior

Helping customers make smart decisions is not an easy job. How do we know if our campaigns and communications work? How do we respond to our customers’ needs? The theory of planned behavior can help answer these questions by predicting and understanding how customers act.

According to the theory, a person’s behavior is predicted by his or her intention, which is in turn predicted by the attitude toward that behavior. This theory can be used to evaluate customers’ general attitudes, their feelings about social norm pressure and their difficulty in achieving the desired behaviors.

This theory is used in a wide variety of areas and can be particularly useful when the desired behavior doesn’t result in immediate benefits. One such example is the Dutch government’s campaign to stimulate better health behaviors of young adults toward smoking. By using the slogan “Maar ik rook niet!” (at least I don’t smoke!) the government hoped to change general attitudes and social norms to drive more healthy behaviors.

There may be similar benefits for financial planning. This task can often lack urgency, resulting in customers procrastinating over their decisions. However, providers can respond by creating better customer awareness and positive attitudes toward their financial planning products.

Although this theory is already used in numerous fields, it surprised us that we couldn’t find clear-cut examples of its application in financial or pension planning. We are interested in exploring this is more detail and welcome you to share examples with us.

The Dynamics of Inertia

In psychology and economics, inertia refers to the tendency to remain passive, even in the presence of good reasons to become active. Several companies are well aware of this tendency: That is why we get the first two months for free at our internet provider and we pay 50 euros a month for a gym we never go to. These providers are very well aware that our inertia will prevent us from canceling the subscription.

When you translate this thinking to retirement savings, there has been extensive research on the mechanisms underlying inertia/underlying mechanisms of inertia. Life and pensions insurance requires you to make long-term decisions under changing and uncertain conditions that do not result in an immediate state of happiness or fulfillment. This causes people to avoid or postpone retirement preparations for as long as possible. So even if you do understand and appreciate the long-term benefits of taking action, it is much easier to remain passive. So how do you beat it, this inertia?

Aegon started in 2016 with its Future Fit Strategy. The purpose is to become the “customer-based company of the future” by enabling people to make self-conscious decisions on their financial future. For the organization, this means doing the right things in the best possible way for their customers.

Alternatively, you can try to provide immediate incentives by addressing the individual. For instance, Nationale-Nederlanden challenges you to create an image of the future you and explains that to achieve the goals you’ve set for later you have to get moving now. The company effectively asks you to think about how you WANT your future life to look like, and what can you do about it NOW to reach those life goals.

Financial anxiety

The top source of anxiety, according to the Stress in America Survey, is money, followed closely by work and the economy. These three factors clearly are causes of financial anxiety. People who experience financial anxiety have a bias in processing information and are more likely to use avoidance mechanisms.

See also: Thought Experiment on Life Insurance  

One way to cope with financial anxiety is gamification. Gamification moves away from conventional enterprise communications toward personalized, easy and playful interactions. As an example, Mint.com is a tool that aims to demystify financials and future planning by incorporating simple and more entertaining elements to decision making. These include goal trackers, visual breakdowns on spending habits and budget allocation and simple charts displaying the same data as spreadsheets but in a much more appealing and easily accessible manner. This makes it simpler to understand exactly where your money is going every month.

Another way to address financial anxiety has been created by U.K. pension communications agency Pension Geeks. The company started with an annual Pension Awareness Day, including a bus being driven across the country to inform and support the public with their financial planning. The company is using several techniques to make it fun and understandable with video’s animation, games and apps to make pensions accessible for all.

Conclusion

The second approach to turn insurance into a product customers actually want to buy is to reconnect with your customers. There’s still a big engagement gap between insurers and their clients. When trying to change people’s behavior, the most important thing is to understand people’s needs, to listen to what they want and to respond to their current behavior. Then, you have a chance to  overcome the dynamics of inertia and financial anxiety.

The third part of this series to change insurance into a product customers actually want to buy will bring the insights of Part 1 and Part 2 together.

Is ‘Connected Health’ for Real?

“Connected health” might shape the future of healthcare and of health insurance. I define it as any insurance solution based on sensors for collecting data on the state of an insured risk and of telematics for remote transmission and management of the data collected. Connected health offers a great capacity to register, deposit and analyze data that comes from the users themselves, giving the insurer never seen before insight into actual behaviors and lifestyles.

While “connected insurance” applies in many areas — with auto insurance leading the way — health insurance is a more delicate field that will probably face more obstacles on the road to a connected future.

See also: Healthcare Needs a Data Checkup

Insurance covers can be differentiated by client segments, and the insurer can propose different levels of assistance based on specific tools and services. Typical examples of health services are:

  • Medical contents in multiple formats;
  • Call center for emergencies;
  • Pharmaceutical products ordering and home-delivery;
  • E-health with specific devices for specific target patients (elder, heart problems and diabetes patients, etc.), including alerting on possible critical health conditions.

Furthermore, professional medical advice can be delivered in multiple ways (messaging, call, video). Discounted prices for doctors and medical structures can be proposed through a preferred network, while having the option of doing bookings and payments online. Another plus is to have one’s complete medical history stored in digital format to allow easy access.

With the objective to push through the adoption of healthier behavior and raise engagement, solutions include: gamification based on wearables and tailor-made goals, wellness content in multiple formats and agreements with gyms, shops and other types of service providers.

Source: Connected Insurance Observatory

Connected insurance in the health sector is affecting the whole insurance value chain and generating real value for the insurance P&L. According to Matteo Carbone, founder of the Connected Insurance Observatory, five main value creation levers emerge:

  • Risk selection;
  • Risk-based pricing;
  • Value-added services;
  • Loss control;
  • Loyalty and behavior “steering” programs.

Data collection can improve the overall quality of the underwriting process, allowing price adjustments or covenants. Devices can measure client behavior and collect data to customize covers and propose prices or discounts based on a one-to-one approach instead of a traditional approach based on averages.

The ability to monitor the “quantity” and “level” of risk exposure is now possible and can be applied to the single customer.

Value-added services have a double aim: on the one hand to guide clients toward desired behavior, on the other hand to offer services to clients. Some ancillary services are proposed to the insured clients to exploit relevant data detected; these services could be directly supplied by the insurance company or by means of an ecosystem of specialized partners.

Connected insurance can enable the development of a more efficient and faster claims management processes, while limiting the portfolio loss ratio.

Behavior programs use information gathered on the behavior of clients to direct them toward less risky solutions. A good reward system is a key, and programs based on innovative gamification approaches are a must, to keep clients engaged.

Source: Connected Insurance Observatory

Experts estimate a huge potential reduction in loss ratio on medical reimbursement by implementing this innovative approach in health insurance. Starting from the current health losses on an average traditional portfolio, best practices show a potential saving of 20% by driving the choices of the insured within preferred networks of doctors and medical structures. The use of m-health tools can help lower claim costs by an additional 10%, while the implementation of loyalty and behavior “steering” can contribute a further 15%.

In synthesis, a reduction in loss ratio of around 50% seems to be achievable with a consistent and intelligent approach in the implementation of these levers.

Predictive and preventive alerts can potentially play a huge role, too, but that has still to be proven.

See also: Unconnected World, and What It Means  

Insurance companies should gradually move from their traditional positioning as health insurer of an ill person (playing the role of claims manager and expense payer) toward that of a 360-degrees health counselor aiming to insure lower risk and healthier customers with a customer-centric, tailor-made approach.

Innovation should aim to transform the health insurance company from a simple payer to a player in the customer health journey. The industry has to move from a “cure” to a “care” approach.

So, is connected health insurance any good? It is a win-win for both insurer and insured. The insurer optimizes internal processes and cuts costs while the insured has incentives to live a healthier life!

How to ‘Gamify’ Risk Management

In 2014, I collaborated with EY to develop Russia’s first risk management business game. It was great fun, and as a result we created a pretty sophisticated business simulation.

Participants were split into teams of 10, each person receiving a game card that describes a role (CEO, CFO, risk manager, internal auditor, etc.). At the start of the game, teams must choose one of four industry sectors (telecom, oil and gas, energy or retail) and name their company. The game consists of four rounds, in each of which teams must make risk based decisions. Each decision has a cost associated with it and a number of possible outcomes. Teams must analyze and document the risks inherent in each decision they make. The riskier the decision, the higher the probability of adverse outcome. At the end of each round, a computer simulation model chooses a scenario, and the outcome is announced to each team.

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The aim of the game is to increase the company valuation by properly weighing risks and making balanced business decisions. The winning team is the one that increased its company’s value the most after four rounds.

This game was successfully played by participants at two risk management conferences as well as postgraduate students at the Moscow Institute of Physics and Technology.

See also: Can Risk Management Even Be Effective?  

More information about first game is available here. Let me know if your company is interested in sponsoring the translation and running the game in English.

Risk management business game 2015

In 2015, I started working with Palisade to develop something a little different.

Just like in the previous version of the game, the participants were split up into teams of 10. However, the game mechanics have changed substantially. Each player still receives a card describing a role, but this time the card provides a complete history of the character’s role within the company and assigns each player a unique secret mission.

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The aim of the game is to successfully complete a merger between a large holding company and an innovative startup. The game, as before, consists of four rounds. The first round involves performing a risk assessment of the target company. Each team must identify 10 significant risks using only the information provided on the cards.

The second, third and fourth rounds are dedicated to the management of these risks. Each identified risk has between 5 and 10 possible mitigation strategies that can be selected by the team. Each team has a limited budget dedicated to risk mitigation, and each mitigation action has a cost.

The effects of each mitigation action selected by the teams was modeled using Palisade@Risk to determine whether it increases or decreases the value of the target company. The winning team is the one that increases the value of the target company more than the others and is then able to complete the merger.

More information is available here. Let me know if your company is interested in sponsoring the translation and running the game in English.

Risk management business game 2015 (online version)

With the help of eNano, we went even further and produced an interactive risk management business game (only available in Russian). This game combined an e-learning course and an interactive business simulator.

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Each participant takes on the role of general manager of one of three innovative companies. They then receive tasks that need to be completed throughout the e-learning course:

  • First, each participant needs to conduct interviews with all colleagues to identify and document risks;
  • Then he needs to evaluate risks using the information presented. Note that, just like in real world, most of the information presented is biased;
  • Then he needs make difficult decisions relating to risk mitigation given a limited budget;
  • During the last step, participants need to develop an action plan designed to improve risk culture.

All of these steps increase or decrease the company valuation. You can find out more about this course here.

Risk management game 2016

This game is the result of collaboration among Risk-academy, Palisade, Institute for Strategic Risk Analysis (ISAR) and Deloitte. Together we have created an amazing business game to teach non-financial management and staff how to perform risk modeling on day-to-day management decisions.

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Participants will have to play a role of an aircraft engine manufacturing company. Each team has prepared a business case for a multimillion-dollar plant modernization. Unfortunately, the project plan have just been rejected by the board, so teams only have a couple of hours to conduct in-depth risk analysis and present an updated business case to the board.

See also: Risk Management, in Plain English  

The game is focused on risk modeling, requiring participants to identify and validate management assumptions, identify relevant risks, establish ranges and select possible distributions for each assumption, perform Monte Carlo simulation using Palisade@Risk and present the final results. All this has to be performed in limited time and with incomplete information… just like in real life. And just to add a little bit of drama, like in real life participants have to deal with unexpected “black swans” during the game.

The aim of the game is to prepare risk analysis for a multimillion-plant modernization investment project. The team with the highest risk-adjusted rate of return wins.

This game has also become one of the modules in the risk management training ran by ISAR; more information is available here.

Due to lots of positive comments, the latest risk modeling game is now available in English here.

What’s next?

The latest game was both hard and entertaining, so we began talks with our partners to turn it into an online risk quantification championship. The games will require online registration, have downloadable content and require proper risk modeling. Championships will run once a quarter, and winners will receive wonderful prizes.

5 Technologies That Connect to Customers

In the past, customers tended to ignore their insurance after they purchased it. They interacted with their agents only a couple of times a year — to purchase a policy or file a claim — and then they forgot about it.

Now, technological advancements give consumers the ability to connect with their insurance products and services at all times, creating highly personalized services that are in high demand. In fact, 77% of consumers are willing to provide usage and behavior data in exchange for lower premiums, personalized coverage recommendations or faster claims settlements.

The following five new technology trends will change the future of insurance for carriers and consumers alike.

1. Vehicle Telematics

Vehicle telematics transmit real-time data directly to insurers through devices installed in vehicles. As a result, consumers receive more accurately priced premiums and better risk assessment that isn’t solely based on demographic information.

Telematics can also help align your auto insurance premium with your driving usage. This is known as usage-based insurance (UBI). By 2020, it is projected that 70% of all auto insurance carriers will use telematics and some form of UBI.

2. Mobile Health

Mobile health, or mHealth, refers to apps and wireless devices that can be used in healthcare for prevention, treatment and rehabilitation. Both insurers and consumers can benefit from mHealth, and its popularity is demonstrated by the fact that the industry’s revenue is expected to reach $26 billion by 2017.

Mobile health allows insurance companies to sell policies that are specific to their consumers’ health data as well as their adherence to medications and treatment plans. Consumers can use mobile fitness apps to monitor and improve their health, ultimately reducing premium rates.

See also: 4 Technology Trends to Watch for  

3. Gamification

Gamification incorporates different aspects of games to add some fun to the insurance consumer’s experience while solving real-life issues. Insurance companies recognized the lack of customer engagement and have sought to improve this through gamification.

Though gamification techniques are fairly new to the insurance world, they are likely to benefit consumers. Gamification can turn formerly tedious activities — like tracking healthy habits or filling out a health risk assessment — into engaging games that result in rewards and continue to motivate consumers to live healthy lifestyles.

On top of its consumer influence, gamification will be used to improve the workplace. Forty percent of the Global 1000 top companies will use gamification as an incentive and to transform business operations. Keeping employees engaged, especially during a transition, can be highly difficult. Gaming technology is pioneering this issue. In 2012, the gamification market was $242 million. According to a M2 Research study, the market will be $2.8 billion by the end of this year. In other words, we have a lot to look forward to when it comes to interactive engagement as consumers and employees in the insurance world.

4. Drones and Aerial Imagery

While drones are often used as devices for personal enjoyment, they are also transforming the way insurance companies evaluate claims. In the past, insurers needed to visit a physical location to estimate damage and losses. However, drones can now capture aerial images that allow them to more quickly respond to catastrophic events and process claims. Cognizant, a consulting firm, estimates that drones will make insurance adjusters’ work flow 40% to 50% more efficient.

The insurance industry’s growing use of drones will help improve safety practices in the aftermath of a disaster by having fewer people — insurance agents and consumers — on the ground taking photos. Drones also allow insurance carriers to better assess how an event occurred and the resulting damages with high-resolution images from all angles.

5. Home Automation

As consumers continue to adopt smart home technology, from voice-controlled lights to sensors that detect pipe leaks, they will benefit from home insurance premiums that are more directly tied to their lifestyles.

Some insurance companies offer discounts to homeowners who use smart home technology that can decrease their home’s risk of damage or burglary. Smart thermostats, smoke detectors, security systems and deadbolt locks can all improve a home’s safety and can decrease your homeowners or renter’s insurance bill.

See also: How Technology Breaks Down Silos  

Insurance companies will continue to adapt as this technology continues to popularize. More and more homeowners are investing in smart home technology — 45% of all Americans, in fact.

New technology has paved the way for a more personalized experience for insurance customers. As a result, insurance companies are shifting away from transaction-based services and are moving toward building relationships with their always-connected consumers.

A Key Misconception on Digitization

The industry knows today’s customers are ready for digital insurance. It knows the expectation for anywhere, anytime responsive service is dictating how customers choose service providers. But are insurance professionals stepping up? Based on what we are seeing, they still need some convincing.

How often is the digital path chosen?

An interesting trend emerges when we look at technology that enables digital insurance, namely e-signatures. E-signature adoption rates approach 100% in unmediated channels, including online portals. As processes become mediated, though, especially in the hands of captive and independent agents, adoption declines.

How do we explain this behavior when we know customers want to transact digitally and are doing so when managing transactions on their own? The answer is the belief by many captive and independent agents that digitization implies self-service, compromised personal attention and less of a role for agents to play in the transaction.

We have seen enough e-signature implementations to know that the key to high opt-in rates, especially among independent agents, is change management.

Managing digital change to get the highest agent adoption rates

Here are some of the ways insurers can manage the transition to digital insurance and ensure agents adopt new technologies.

See also: Digital Insurance, Anyone?

Involve key stakeholders early: This is obvious, but it’s a practice that is not always followed. Early involvement from select agents or staff members, for example, will ensure that their feedback is captured and accounted for and that they will then have more personal investment in the success of the project. It also gives the project more credibility when key stakeholders are on board.

Gain executive buy-in: It is not uncommon to encounter resistance when moving processes off of paper into the digital domain. Legal concerns may arise; perhaps IT will weigh in, and other lines of business may voice apprehensions. Without executive commitment, initiatives can get sidetracked. To gain that buy-in at the executive level, it’s imperative to focus on the business improvements the technology will bring.

Implement e-signatures in phases: It’s best to start with a smaller, hand-chosen group of early adopters – your technology evangelists. Get them using the new solution, gather feedback and tweak processes if necessary. This is your opportunity to recruit champions and advocates, and to document testimonials that will be helpful in your communications efforts to roll out the project on a larger scale.

Provide comprehensive training: This can be as simple as watching tutorials, but, in truth, nothing beats hands-on practice. Training should be designed for staff and agents in a way that allows them to gain comfort in the new process. You can create an operational sandbox account for your users so, when they are in front of a client, the process is practiced and smooth.

Offer incentives: Incentives can be very effective in gaining rapid adoption and helping to ease learning curves. Gamification is a new trend that lends itself nicely to training. As an example, insurers can award points for every new business application submitted electronically and offer reps the ability to redeem points toward prizes. By delaying the eligibility for rewards and incentives until after a specified number of transactions is attained, you can ensure the initial learning curve hump is overcome.

See also: Stretching the Bounds of Digital Insurance

Communicate a lot and often: People need advance warning when big changes come, even if they’re good changes. Anticipate questions and answer them in advance. Make the process personal. Provide real examples of how it will help individuals in their day-to-day jobs. Don’t focus on the benefits to the company but rather emphasize the time saved, the convenience factor for both agents and their clients.  

Use testimonials from the champions you recruited during your earlier phase rollout to help encourage adoption.

Show the value of metrics: Monitoring and leveraging analytics from transaction data is a convincing way to maintain executive support for the new, digitized process.

The “on-demand” customer mindset is changing the insurance business fast and fundamentally. A recent poll of insurance providers and insurance brokers shared at an industry event revealed “digitization” as the top response to major industry game-changers (or threats). Are you ready?