Tag Archives: GoBear

More Transparency Needed on Premiums

Benjamin Franklin famously said, “In this world, nothing can be sure to be certain except death and taxes.” If he was alive today, he might want to rewrite that quote to include increasing insurance premiums. Every year, without fail, premiums rise.

That’s great news if you’re an insurance company, but it’s not so great when you’re renewing your annual policy. And while there’s a weary public acceptance that insurance premiums will inevitably go up because insurance companies do, after all, have to make money like any other business, transparency around premiums and how they are calculated is an issue. Insurers still fall short when it comes to explaining to their customers about rates. Jargon is rife in communications to customers and is often indecipherable, which just makes matters worse.

Consider my own recent experience: I purchased travel insurance online and was sent a 22-page policy document to decipher — most of which would have benefited from a lawyer’s expertise to help me understand it. Nine pages of the document were spent explaining what wasn’t included in my policy!   

See also: The Insurance Renaissance, Part 2

More insurance companies could ensure greater customer loyalty and instill trust by doing a better job at explaining some of the policies and clauses. For example, some international health insurance clauses that consumers may not be aware of but which are highly beneficial:

  • Many health insurers will provide protection for any unexpected cost in the future and keep providing cover even when a condition develops. They will keep paying the cost of any treatment required, up until the policy limits.
  • International health insurance will cover medical costs abroad, even if the insured chooses to travel for surgery outside her country of residence. So if there is a famous specialist in another country and someone wants to have surgery there, their insurance will pay the medical costs.
  • Most insurance companies will provide cover until very old age, 80 to 120-plus. This is important to know because if someone has an insurance policy that only provides cover up to the age of 60, it will be difficult to find insurance to cover any conditions subsequently developed. And this is the age when health insurance is more useful than ever.
  • There are now insurers that are rewarding customers who don’t make a claim with a “No Claims Discount.”  

And one that could cause confusion:

  • A person may think he is covered for as much as $1 million under health insurance for hospital bills and treatment etc., but what is often unclear is what conditions are not covered by that sum.    

See also: Important Alliance to Fight Health Costs

At the end of the day, buying insurance should be viewed as an investment that provides peace of mind and reduces a person’s financial liabilities — and everyone would agree that this is worth paying for. But consumers should be given the opportunity to make a much more informed choice when renewing a policy by having much greater visibility on how premiums are determined.

For the insurance industry, a continuing lack of transparency around the calculations of premiums can only be bad for business in the long run. In a fiercely competitive industry like insurance, consumers now have more choice than ever when choosing a policy. So maintaining customer loyalty is everything and, together with consistently good customer service and swift settling of claims, the key to ensuring customer loyalty is better communication and transparency across the industry.

After all, it’s much harder to win new business than to retain existing customers. A more consumer-focused insurance industry will also encourage more people to purchase their products, so getting better at communicating can only be a win-win situation. It’s also about making the process simpler, easier, transparent and giving an online experience that customers would expect. Most people can take bad or difficult news if it is explained to them properly — and getting a clear, jargon-free and understandable explanation for insurance premiums puts the purchasing decision power back where it should be: in the hands of the consumer.  

New Insurance Models: The View From Asia

Recently, I chaired the 4th annual Asia Insurance CIO Technology summit in Jakarta, Indonesia. The experience brought me into contact with an entirely different set of insurers and insurance technology players. I was rewarded with a fresh view on the challenges and opportunities of insurance during an era of disruptive innovation, as well as a new perspective on how Asian insurers are creating and launching products, defining new channels and new models to out-innovate the competition.

I should state at the outset that Asian insurers aren’t doing everything differently than North American and European insurers. It is a global era. In many ways, their competitive issues are similar. We are all having the same conversations. As I considered the similarities, however, it made the small differences stand out. Just as Asia is hours ahead of the Western world throughout the day, I had the strange feeling that I was listening to the ends of conversations that are only beginning in other parts of the world. Because populations, cultures, use of digital technology and the nature of businesses vary, I thought I would share a short list of insights from my eavesdropping in an effort to shed light on how disruption is being embraced elsewhere and how it could ripple through the industry. I’ll center my thoughts on models, mandates and marketing.

Models

Everyone is discussing models. Business models. Technology models. Distribution models. Transaction models. There is good reason. It’s a model v. model world, and Asia-Pacific insurers know that the model is the center of a business. For the outer layer to be responsive, the business model can’t be a slow-moving leviathan. Disruption has the disturbing tendency to render perfectly good models obsolete. Creating a responsive, obsolescent-proof business model is of great interest to Asian insurers, which are responding to radically different consumer expectations and competitive models than in prior decades.

Traditional insurers at the conference (as well as challengers) are aggressively rethinking the insurance business model. Some believe that insurance will be run more in an open ecosystem, becoming more fragmented and niche-focused, building on the micro concept. If an insurer can embed products in other business models/industries, especially those with high-frequency transactions, then they capture the opportunity for both a new distribution channel and a new product. New Distribution Channel + New Product = New Market Opportunity.

These are areas where insurers can see quantum leaps in growth, yet they are also the areas where insurers are most susceptible to start-ups beating them to the punch.

Mandates

Three clear mandates stood out above all others for Asian insurers – the role of CIOs, the necessity of new cyber security solutions and a new, enterprise-wide look at analytics.

For CIOs, the clarion call was for a rapid advancement and widening of scope for their role within the insurance organization. CIOs must become change agents and grow in influence. They must be active in technology review and adoption, more collaborative with CMOs regarding digital platforms and data sharing and more effective at translating business vision into system and process transformation.

Cybersecurity is a never-ending mandate that also seems to never have the perfect solution. It was universally agreed-upon that today’s security measures have the frustrating trait of being mostly temporary solutions. Blockchain technology (currently in use by Bitcoin, among others) was discussed as a more permanent solution for many security issues. Blockchain use makes transaction fraud nearly impossible. Verification of transaction authenticity is instant and can be performed by any trusted source, from any trusted location.

On a broader note, however, it was conceded that security is no longer just an IT issue, but it is a board-level, organization-wide imperative because security concerns the full enterprise. Boards must fund and address cybersecurity across three aspects: confidentiality, availability and integrity.

Enterprise-wide analytics was another organizational mandate. Some Asian insurers are moving toward using end-to-end analytics solutions that cross the enterprise in an effort to gain a single client view and execute a targeted pipeline, with unified campaigns and advertising. Analytics will also give them risk- and assessment-based pricing, improved predictability for loss prevention and better management of claims trends, recovery and services.

Marketing

Insurers are rapidly moving from product-driven to customer-driven strategies and from traditional distribution channels (such as agents) to an array of channels based on customer choice. At the same time that Asian insurers are looking at relevant business models, they are diving deeply into how marketing tactics may completely shift from a central hub to a decentralized “micro” model. The industry spark has been a short list of both established insurers and start-ups that are capturing new business through new marketing methods, new partnerships and new market spaces.

ZhongAn, for example, is selling return insurance for anything bought on Alibaba. Huatai Life is promoting unit-linked policies on JD.com and selling A&H insurance via a WeChat app. PICC Life has found a distribution partner in Qunar.com, an online travel information provider. These examples require a completely different, high-volume, interaction-based, data-rich, small-issue marketing plan. That kind of marketing will prove to be of great value to insurers that have added flexible, transaction-capable core insurance systems…that are cloud-based to scale rapidly.

Aggregators are now commonplace in insurance, and Asian insurers are looking at how this channel will affect their business, as well as how to use aggregators as a tool for competitive advantage. GoBear, currently selling in Singapore and Thailand, was given as a prime example of how aggregators represent the future of insurance shopping. GoBear isn’t just an aggregator. It is an innovator, revamping the concept of insurance relationships. GoBear Matchmaker, for example, will allow a prospect to pick insurance but also allow the insurer to pick prospects/clients. GoBear Groups will leverage groups/crowd sourcing.

What do these M’s add up to?

Insurance business models, mandates and marketing are all ripe for inspection and change. In some ways, Asian insurers are in a better position for these ground-shaking industry changes because so many of them recognize the stakes involved and the cultural shift required to thrive. Asian populations and culture are ready to embrace technology solutions to meet consumer demands. As all insurers globally address their models, mandates and marketing, it will be fascinating and educational to see how quickly the different markets adapt and are emerging as innovative leaders and how these regional innovations will influence other regions as they turn into global solutions.

One thing was clear to me in my time in Jakarta – Asian insurers are optimistic, active and excited about the road ahead.