A playbook is better than a simple plan. A plan is a road map to a desired future based on current conditions and the steps needed to go from the current state to a future state. A playbook acknowledges that there are many possible futures and that businesses need to be built in a way that will adapt and thrive in any of them.
In our past three blogs (here, here and here), we’ve discussed the concept of digital playbooks. Using a variety of digital “plays,” insurers can customize their playbooks in an effort to meet future demands and opportunities with flexibility. Using both the consumer market and the SMB market as examples, we created a pregame analysis. In this blog, as we look closely at small to medium businesses, we’ll consider how the scouting report can help us build Ideal Offerings, plays that are likely to help insurers bring digital capabilities to a ready market.
New SMB Behaviors and Expectations
Business is changing so rapidly that it is difficult for insurers to keep up. Aside from technology changes and generational expectations, the sheer numbers and types of businesses grow daily. The vast majority of new businesses are within the small-to-medium business space — and owners determine or greatly influence purchase decisions.
For that reason, Majesco’s latest SMB research accounted not only for technology needs and trends within businesses, but it also accounted for generational differences in the ownership that controls insurance decisions. We found that when it comes to experience with new technologies and trends, there is a clear, strong interaction between business owner age (generation) and the size of the company (number of employees).
See also: Digital Playbooks for Insurers (Part 1)
The results of this research can be viewed in our thought-leadership report, Insights for Growth Strategies: The New SMB Insurance Customer. A quick synopsis of the areas of digital impact include:
- Gig economy shift: Across all generational distinctions, there is growth in independent contractor/freelance services.
- Apps/Connected Devices: There is strong commercial use of apps and connected devices, with the highest use occurring in companies with 10-99 employees in the Gen Z/Millennial and GenX segments.
- Digital Payment: All segments have strong use of ApplePay and Samsung Pay, except for Pre-Retirement Boomers.
- On-Demand Insurance: Commercial use of On-Demand insurance is strong, in addition to online purchasing of insurance and the use of cloud-based subscription products.
- Drones and 3D Printers: These technologies are both on the rise, indicating new areas of risk that will require new products and services. 3D Printer use is highest among Gen X/Boomer segment companies with 100-499 employees.
- Risk Prevention: SMBs are willing to look at reduced costs and prevention of risks through value-added services and even social networking.
In creating digital offerings for all SMBs, insurers can begin their brainstorming with a list of digital capabilities and context drivers that are currently relevant to potential new business models and product and service offerings. Keeping this kind of list on-hand will allow companies to add/subtract/combine elements to form new Ideal Offerings.
- Equipment and facility sensors
- Telematics/vehicle and equipment tracking
- Real-time data for traffic, weather and GIS
- Automated mapping and routing
- Facility monitoring and control
- Digital security
- Cloud services
- Mobile account management
- Digital assistant
- Bundled insurance
- Data-driven pricing
- Inventory-based pricing
- Artificial Intelligence
- Augmented Reality
- Preventive Services
- Mobile messenger app-based communications and transactions
- Fitness tracking for employees
Though any business segment could certainly be a place for a new Ideal Offering, the three company and generational segments with the highest level of interest in new offerings were:
- Gen Z and Millennials, 10-99 employees
- Gen Z and Millennials, 100-499 employees
- Gen X and Pre-Retirement Boomers, 100-499 employees
These segments share traits across many areas, including:
- Doing things that reduce risk or provide free or discounted services and products and rewards.
- Using services that prevent or minimize risk, accidents or claims.
- Using insurance to cover an event of specific duration.
- Using mobile messaging apps for quoting, policy management, bill payment, claim filing and claim payment.
- Creating new affinity relationships to get preferred pricing among social groups.
- Using activity-based pricing for employees/vehicles/equipment.
So, what does this mean to the business insurer playbooks — the ones you may be creating right now?
Well, first, it means that the time is ripe for creative business model, product and service development that shifts into the realms of Digital Insurance 2.0, by re-envisioning within the context of digital possibilities and desired engagement. An organization’s digital plays must include transformations that match generational SMB expectations and needs.
These sought-after attributes are redefining the insurance value chain we have known for the last 30-plus years as Insurance 1.0, and they don’t just represent simple improvements. They represent a new world of Digital Insurance 2.0.
Interestingly, pre-retirement boomers are open to digital services that will save claims and improve rates, signs that they are still engaged in making their businesses profitable and competitive. For example, business owners appreciate transparency in operations. Insurers that can provide an ecosystem of sensors, monitoring and risk reduction will find that businesses are highly ready for improved data and analytics regarding their own processes and risks. Every digital risk mitigation solution removes some of the weight and worry of the unknown. These services may go beyond business insurance products. Majesco fully expects that the insurer digital playbook will rapidly be filled with these non-insurance, value-added services that may also be foundational profit centers.
Mobile and messenger-based apps may soon be considered table stakes with business insurers, but Digital Insurance 2.0 capabilities within these apps will continue to grow and improve. They exist at the intersection of business desirability and the need for portable windows into operations and service.
See also: Darwinian Shift to Digital Insurance 2.0
Contextual and on-demand insurance need cloud platform solutions to work. An insurer that is using cloud and AI for real-time data management and decisions, for example, will find it much easier to track and insure (and even provide preferred routing for) freight carriers, delivery services and any business that needs to move people or materials.
The gig part of the gig economy also needs episodic insurance. A benefit in this area may be grouping similar businesses for improved service. All of these possibilities fit within the positive opportunities identified by our research.
Insurtech companies and existing insurers are taking advantage of a new generation of buyers with new needs and expectations, capturing the opportunity to be the next market leaders in the digital age, Digital Insurance 2.0. While Insurance 1.0 is still firmly in place with the smallest businesses and Gen X and Pre-Retirement Boomer business owners, insurance companies need to adapt and innovate to compete and prepare for business shifts that are rapidly unfolding.
Where is your organization on the road to Digital Insurance 2.0? To gain more insights from our SMB research, be sure to read Insights for Growth Strategies: The New SMB Insurance Customer. For an in-depth look at how Cloud technologies can place insurers on the right road to digital transformation, check out Cloud Business Platform: The Path to Digital Insurance 2.0.