Tag Archives: product development

How CX, Product Teams Must Sync Up

Any consumer-serving organization knows how important both its customer experience (CX) and product development teams are. What the organization must also remember is how important the synergy between the two is.

There are many departments that keep an organization running smoothly, but two that must be in sync are your customer experience (CX) and product development teams. Your CX team has the most insight into your customers and, therefore, understands the challenges they face and that the product could solve. The most successful companies are the ones whose product teams leverage the CX team’s customer insights and drive brand loyalty. 

Steve Jobs is quoted as saying, “You’ve got to start with the customer experience and work backward to the technology.”

Here are a few tips to ensure that your CX and product teams can work together efficiently.

Align on a common goal

Despite being two different departments and playing different roles in the company, the CX and product teams must align on a common goal: to solve customer problems and create an engaging customer experience by working together.

Having a shared goal leads to more efficient teamwork and guides fluidity across teams. 

Have each other on speed dial

The CX and product teams must be in constant communication, filling in one another daily about how the customer is experiencing the product.

It’s a good idea for the two departments to connect regularly so that the CX team can share the insights they’ve gathered from customers, what drives customers to contact the company and what the general customer sentiment is when they contact the company. 

Likewise, the product team must share details about product updates that are in the pipeline. This knowledge empowers CX teams to respond to answer customer questions, troubleshoot and retain customer trust.

See also: 3 Ways to Improve Customer Experience

Focus on the feedback loop

The feedback loop is a process in which customers’ experiences with the product are analyzed and shared with the product team to create a product that better meets needs.  

The CX team must first develop a scalable system to granularly track and aggregate data about what drives customers to contact the company.

Although communicating with the customer opens a door of opportunity to improve their perception of the brand, most of the time, when a customer contacts you, it’s because the company or product has failed omehow. This failure point is where the feedback loop starts.

It is then up to CX team members to not only identify the underpinning reasons why customers contacted the company but to also provide such delightful experiences that customers feel more connected to the company than they did before. A great way to measure the latter is to request customer satisfaction ratings of that experience, taking particular note of the response rate to that survey itself. The customers who are most wowed by their customer experience (whether positively or negatively) are the ones who will take the time to respond to your survey. 

The final part of the feedback loop is for the CX team to regularly share which parts of the product could be updated, to both reduce customer servicing costs and help inform and prioritize the product development road map.

Encourage a humanistic approach to business

Make sure your customer advocates embody empathy. They are the ones who are communicating with the customers and responding to their needs. Therefore, they must have the people skills to make the support interaction as pleasant as possible. 

Entrepreneur Tony Allessandra puts this astutely, “Being on par in terms of price and quality only gets you into the game. Service wins the game.” Customer advocates are the face of the company and the first stop for your customers when something goes awry. It’s critical that they know how valuable their role is and that the company empowers them to genuinely meet customer needs.

Your customers’ expectations of their support experiences are different and may vary. Therefore, it’s critical to provide customers with various options. This can involve allowing them to connect with you through different channels, such as chat, email or phone.

See also: Elon Musk and Your Feedback Loop

As for the product team, they must continually look for ways to improve the product experience and recognize the expertise that the CX team has. This will ensure that they’re continuously learning and expanding both their product and customer expertise. 

There are many benefits when your CX and product development teams are aligned on the type of customer experience the company aims to provide. Although the two teams have different day-to-day roles, they both play an important role in helping one another create a customer experience that inspires brand loyalty.

6 Life, Health Trends in the Pandemic

COVID-19 is, in many ways, still a disease of uncertainty, both in the severity of its symptoms and the scale of financial hardship it could ultimately cause. And no business is better equipped to confront uncertainty than insurers.

So it is perhaps unsurprising that life and health carriers are responding to the pandemic with a variety of consumer offerings, from complimentary, compassionate benefits to new protection products and services.

After performing a global review of responses to COVID-19, RGA identified six primary trends:

Compassionate and Complimentary Benefits

Insurers have sought to build trust and goodwill by offering complimentary COVID-19 coverage as a compassionate benefit or marketing expense, with an emphasis on policies with lower face value to manage overall exposure. A multinational insurer in Hong Kong, for example, has begun offering an additional hospital cash benefit of HK$600 (equivalent to US$77) per day for covered clients who may be required to undergo a mandatory quarantine in a hospital or isolation center. Similarly, the local branch of another major insurer in Thailand partnered with a leading telecom operator to offer a market-first, free-of-charge COVID-19 coverage benefit to customers. If a customer requires treatment in a hospital, he or she will receive a hospital indemnity benefit of up to THB1,000 (equivalent to US$31) per day. Still another multinational partnered with a Singapore-based insurer serving private hire drivers to offer a complimentary benefit for all of these essential workers as part of the company’s Group Prolonged Medical Leave insurance policy.

Other forms of consumer relief have proved popular, including premium holidays, grace periods and reductions to policy/premium amounts. Many insurers globally have offered grace periods for premium payments either voluntarily or at the request of local governments and regulators. On the health insurance side, some insurers have waived cost-sharing, co-pay and other deductibles for inpatient hospital admissions due to COVID-19. Some have also sought to support healthcare first responders and other frontline workers through donations of personal protective equipment (PPE) and other charitable efforts.

COVID-Specific Protection

COVID-19 emerged in Asia, so it stands to reason that regional insurers have been first to develop hospital cash and comprehensive care products offering standalone protection in case of diagnosis. For example, one Bangkok-based broker and insurer teamed up to offer Thailand’s first policy that provides cash upon diagnosis with the coronavirus. Similarly, a major Indian insurer offers a COVID-19 support plan, providing end-to-end treatment services, including consultations with qualified doctors, to policyholders who become infected. In Malaysia, a major multinational has introduced a COVID-19 hospital assistance program with an upfront one-time cash payment upon hospitalization with the disease. The program includes a one-time cash payout for family assistance should dependents also be diagnosed. It also includes other assistance for consultation and treatment costs while in isolation or intensive care. Similar products are now emerging across Europe and North America.

See also: Reigniting Growth in U.S. Life Insurance

Segment-Specific Offerings 

The word pandemic derives from the combination of two Greek words: pan (“all”) and dēmos (“people”). But, while all are at risk of contracting the coronavirus, a few face far greater danger due to the essential public services they must perform. Insurers are customizing certain offerings to serve these frontline workers. In China, a first-in-market COVID-19 medical worker insurance program pays cash compensation upon diagnosis. Similarly, healthcare personnel at specified primary and secondary public hospitals, treatment centers, and pharmacies are eligible to sign up for another Chinese insurer’s COVID-19 coverage for free. Another insurer launched COVID-19 coverage targeting shopkeepers in India, with the product paying 100% of the sum insured, irrespective of hospitalization expense, upon diagnosis.

Health and Wellbeing

The coronavirus not only co-opts our cells, it exploits our fears. A lack of clear information and shortages of available testing have compounded the problem in some locations. U.S. insurers responded with new consumer plans that seek to bundle mental wellness services with physician care to address public anxiety with clear and actionable medical guidance. One U.S.-based healthcare carrier repurposed its existing telehealth application for mobile devices. The app now provides a coronavirus assessment based on guidelines from the U.S. Centers for Disease Control and Prevention and the U.S. National Institutes of Health. Customers can connect directly to a board-certified doctor via text or secure two-way video call and use the app to discuss the assessment results. Another U.S-based provider of healthcare IT solutions and services launched a new telehealth product to help physicians and patients stay connected during COVID-19 through real-time video technology. A number of mental health schemes have also emerged around the world with an emphasis on technology to address social isolation.

COVID Diagnostics

Artificial Intelligence (AI) has been coming to medicine, and insurance, for some time. Now the spread of COVID-19 may present a new opportunity to increase use of smart apps and chatbots. A number of insurers are relaunching and rebranding existing AI applications to meet surging diagnosis and informational needs in an era of social distancing and staffing shortages. In China, one major insurer launched a smart, AI-based audio screening system for COVID-19 to strengthen epidemic control and prevention through automated interviewing and risk assessment. Another U.S.-based case manager launched a coronavirus chatbot to answer questions related to COVID-19 and assist in diagnosis, and a multinational in Hong Kong retooled its mobile application to assist in coronavirus contact tracing. Much remains unknown about the overall effectiveness of these emerging technologies, but the increasing use of AI is a trend that merits monitoring.

New Approaches to Sales Operations

COVID-19 has been dubbed an “invisible enemy,” but its effect on the insurance industry has been very apparent. As traditional evidence and sales channels have been disrupted by lockdowns, carriers have moved to accelerate a transition to alternative evidence, simplified and accelerated underwriting and digital distribution.

“Selling at a distance” is a hot industry topic, and those insurers with relatively strong digital capabilities may be best-positioned, while others are playing catch-up. A major multinational recently launched a digital enrollment system, while another unveiled “simple life insurance” to be sold online. Another insurer is now using WhatsApp to deliver policy and renewal documents. One carrier has simplified the claims process for its critical illness policyholders. Upon diagnosis of COVID-19, the policyholder needs to only submit a certificate from a government medical officer to receive a lump sum payout rather than the more copious paperwork typically required.

See also: 4 Post-COVID-19 Trends for Insurers

As the pandemic unfolds, we expect more offerings to emerge. In the medium term, it may not just be health and safety concerns that drive offering design, but the state of the overall economy. Interest rates and slowing economies are placing renewed pressure on insurers to reassess less profitable offerings, such as those with generous guarantees, and to emphasize capital efficiency in the overall product portfolio. Against this challenging backdrop, it is unclear how many product innovations of all kinds are languishing in the exploratory phase versus being introduced to consumers at this time.

Stop Looking in the Rearview Mirror

Despite the headline, this blog is not about auto insurance or distracted driving. It’s about lessons learned in the COVID-19 pandemic. One is very likely to be that a fundamental change is needed in how we, as an industry, view product and services development.

Insurance product creation is based on historical data – the rearview mirror view. It always has been, and there is value in the approach. Past trends are likely to be repeated, and coverages and rating need to reflect that. Insurance departments require years of historical data to approve changes.

However, there is a fundamental change afoot that cannot be ignored. The once-in-100-years event is rapidly headed toward becoming a once-in-10-years event. As COVID-19 has shown, “we’ve never seen this before” is a veritable constant. As a society, and thus as insurers, never before have we experienced 9/11, the Fukishima nuclear disaster, Hurricane Sandy’s impact, the SARS and MERS global reach and on and on.

A stark reality is that the past is no longer the only predictor of future outcomes. But there are tools available to help.

Non-Traditional External Data. There is clear value in using internal and traditional external data in product development. However, as current and not-too-distant past events show, “we’ve never seen this before” is not reflected in that data. As an industry, we have new friends in the amount of scientific data that is now available and the technology providers that can make that data consumable.

A good example is the recent SMA Transformation in Action Award winner Sompo International, in partnership with Praedicat. Sompo was interested in emerging risk. It wanted to know what the next possible asbestos-like event might be so it could react now. Praedicat was able to bring machine learning, natural language processing, artificial intelligence and scientific data sources to this discovery process.

This is the windshield view! And what we, as an industry, need to include as a standard part of product development (and business decision-making) activities.

Clarity of Coverage. An early mentor told me that most people don’t care about their insurance coverage until they need it. One can debate the accuracy of that statement, but it does lead to the issue of clarity of coverage. People need to understand their coverage to care.

Unfortunately, there are already a number of lawsuits about what is and isn’t covered under certain policies related to COVID-19 outcomes. This happened after 9/11 and Hurricane Sandy, etc., too. This will never go away entirely, but it certainly can be mitigated. For example, for many insurers, due to mergers and acquisitions, it is not clear what is or is not covered within their total book of business. This is an area where technology can assist via AI to review and compare coverages between old and new products so that coverage issues can be addressed and clarified. Again, a little more windshield and less rearview mirror.

See also: Will COVID-19 Disrupt Insurtech?  

Creative New Services. Not too long ago, there were some insurance departments that would not approve services within insurance products. Fortunately, that problem has largely disappeared. Insurers are attaching mitigation services to cyber policies and IoT device implementations. Insurers can play an important part in extending services.

Product development initiatives should include services analysis as a routine part of activities. Services development can take advantage of the learnings coming out of external data analysis – are there gaps a service can address? Some insurtechs have homed in on this possibility.

For example, Jumpstart Recovery provides financial relief for whatever a person needs in the event of an earthquake outside of a traditional earthquake policy. The website identifies examples of pet care, camping supplies and document restoration. And Jumpstart Recovery is parametric-based, so there is creativity on several fronts. Maybe there’s a place for a similar attachment to a standard worker’s comp or business interruption policy to cover gaps in the event of a pandemic. More windshield thinking!  

Right now, there is so much going on, it’s really hard to think about the creative and technology-based products and services that insurers can deliver to individuals and businesses. Things will settle down, and COVID-19 will get under control. However, on some fronts, there’s reason not to return to the same old way of doing things because the risks we insure are changing rapidly.

“We’ve never seen this before” isn’t going away. As insurers, we need to step up and be prepared, not just to preserve internal financial results, but because we can continue to improve society with the right tools, data and insights. Products and services need to be based on the forward-thinking, windshield view as much as it has been based on the historical, rearview mirror process of the past.

We are in a time when technology can be the facilitator. Out of adversity comes progress.

How to Speed Up Product Development

The traditional product development cycle in property and casualty insurance moves at a snail’s pace. Drafts, approvals, revisions, verifications of key details and other steps place months between the moment a product is envisioned and the day it becomes available to customers.

As technology speeds the pace of daily life and business, the traditional product development cycle continues to represent a drag on P&C insurers’ efficiency and bottom line. Here, we discuss some of the biggest pain points in the product development cycle and ways to boost speed without sacrificing quality.

Cycle Slowdown No. 1: Outdated Processes

During the last few decades of the 20th century and into the 21st, speeding up the product development cycle wasn’t on most P&C insurers’ to-do lists, Debbie Marquette wrote in a 2008 issue of the Journal of Insurance Operations. Using the fax and physical mail options of the time kept pace with the as-needed approach to product development.

Marquette noted that in previous decades, product development not only involved a team, but it often involved in-person meetings. “It was difficult to get all the appropriate parties together for a complete review of the product before the filing,” Marquette wrote, “and, therefore, input from a vital party was sometimes missed, resulting in costly mistakes, re-filing fees and delays in getting important products to market before the competition.”

In the 1990s, the National Association of Insurance Commissioners (NAIC) realized that the rise of computing required a change in the way new insurance products were filed and tracked. The result was the System for Electronic Rate and Form Filing (SERFF).

SERFF’s use rose steadily after its introduction in 1998, and use of the system doubled from 2003 to 2004 alone, according to a 2004 report by the Insurance Journal. By 2009, however, SERFF’s lack of full automation caused some commentators, including Eli Lehrer, to question whether the system needed an update, an overhaul or a total replacement.

Property and casualty insurers adapted to SERFF and the rise of other tech tools such as personal computing, word processors and spreadsheets. Yet adaptation has been slow. Today, many P&C insurers are still stuck in the document-and-spreadsheet phase of product development, requiring members of a product development team to review drafts manually and relying on human attention to detail to spot minor but essential changes.

The result? A product development process that looks remarkably similar to the process of the 1980s. The drafts and research have migrated from paper to screens, but teams must still meet physically or digitally, compare drafts by hand and make decisions — and the need to ensure no crucial detail is missed slows the product development process to a crawl.

See also: P&C Core Systems: Beyond the First Wave  

Cycle Solution No. 1: Better Systems

The technology exists to reduce the time spent in the development process. To date, however, many P&C insurers have been slow to adopt it.

Electronic product management systems streamline the process of product development. The “new-old” way of using email, spreadsheets and PDFs maintains the same walls and oversight difficulties as the “old-old” way of face to face meetings and snail mail.

In a system designed for product development, however, information is kept in a single location, automated algorithms can be used to scan for minute differences and to track changes and tracking and alerts keep everyone on schedule.

By eliminating barriers, these systems reduce the time required to create a P&C insurance product. They also help reduce errors and save mental bandwidth for team members, allowing them to focus on the salient details of the product rather than on keeping track of their own schedules and paperwork.

Cycle Slowdown No. 2: Differentiation and Specificity

Once upon a time, P&C insurers’ products competed primarily on price. As a result, there was little need to differentiate products from other products sold by the same insurer or from similar insurance products sold by competitors. During product development, insurers allowed differentiation to take a backseat to other issues.

“Prior to the mid-1990s,” Cognizant in a recent white paper notes, “insurance distributors held most of the knowledge regarding insurance products, pricing and processes — requiring customers to have the assistance of an intermediary.”

Today, however, customers know more than ever. They’re also more capable than ever of comparing P&C insurance products based on multiple factors, not only on price. That means insurance companies are now focusing on differentiation during product development — which adds time to the process required to bring an insurance product to market.

Cycle Solution No. 2: Automation

Automation tools can be employed during the product development cycle to provide better insight, track behavior to identify unfilled niches for products and lay the foundation for a strong product launch.

As Frank Memmo Jr. and Ryan Knopp note in ThinkAdvisor, omnichannel software solutions provide a number of customer-facing benefits. A system that gathers, stores and tracks customer data — and that communicates with a product management system — provides profound insights to its insurance company, as well. When automation is used to gather and analyze data, it can significantly shorten the time required to develop insurance products that respond to customers’ ever-changing needs.

“An enterprise-wide solution enables workflow-driven processes that ensure all participants in the process review and sign off where required,” Brian Abajah writes at Turnkey Africa. “Subsequently, there is reduction in product development costs and bottlenecks to result in improved speed-to-market and quality products as well as the ability to develop and modify products concurrently leading to increased revenue.”

The Future of Development: Takeaways for P&C Insurers

Insurtech has taken the lead in coordinating property and casualty insurers with the pace of modern digital life. It’s not surprising, for example, that Capgemini’s Top Ten Trends in Property & Casualty Insurance 2018 are all tech-related, from the use of analytics and advanced algorithms to track customer behavior to the ways that drones and automated vehicles change the way insurers think about and assess risk.

It’s also not surprising, then, that companies using technology from 1998 find themselves stuck in a 20th-century pace of product development — and, increasingly, with 20th-century products.

See also: How Not to Transform P&C Core Systems  

As a McKinsey white paper notes, the digital revolution in insurance not only has the potential to change the way in which insurance products are developed, but also to change the products themselves. Digital insurance coverages are on the rise, and demand is expected to increase as the first generation of digital natives begins to reach adulthood.

Alan Walker at Capgemini recently predicted that in the near future property and casualty insurance product development will become modular. “Modular design enables myriad new products to be developed quickly and easily,” Walker says.

It also allows insurers to respond more nimbly to customers’ demands for personalized coverage. And while the boardroom and paperwork approach to development is ill-equipped to handle modular products, many product development and management systems can adapt easily to such an approach.

“Insurance products embody each insurance company’s understanding of the future,” Donald Light, a director at Celent, wrote in 2006. “As an insurance company’s view of possible gains, losses, risks and opportunities change, its products must change.”

Twelve years later, Light’s words remain true. Not only must insurance company products change, but so must the processes by which companies envision, develop and edit those products.

Just as the fax machine and email changed insurance in previous decades, the rise of analytics and big data stand to revolutionize — and to speed up — the product development process.

Global Trend Map No. 15: Products

Following on from last week’s post on Regulation, it is time for our final ‘Key Theme’, on Product Development, after which we move on to our Regional Profiles. Product development is the bread and butter of the insurance industry – the question is not whether to build products but rather which products will best serve the needs of today’s increasingly demanding insurance customers.

What has become clear across this content series is that product development can no longer occur in silos, with one function creating products for another function to sell. Insurers are determined to make every moving part of their business serve the customer, and what this means in concrete terms is that every division of the business has a contribution to make toward the creation of customer-centric products.

The line between product developers and product salespeople, as in so many industries, is therefore becoming blurry. In this sense, Product Development is the central node into which feed all our other ‘Key Themes’ (Analytics & AI, Digital Innovation, IoT, Marketing & Customer-Centricity, Distribution, Claims, Fraud, Cybersecurity, Investment Management and Regulation). And all the indicators suggest that insurers are only just beginning to tap the opportunities for technology-driven product creation.

“The biggest problem these days is, although everybody is talking about Digitisation and Disruption and are modernising their core systems with huge investments in order to support these new trends, the underlying products are not yet ‘digital ready’ – even new ones.” — Oliver Lauer, former Head of Architecture / Head of IT Innovation at Zurich

In this installment, we start by looking at where innovation is occurring (by insurance line and insurance department) before considering some of the broad trends in product development – from bundling and upselling to diversification and Usage-Based Insurance (UBI). The following stats and perspectives are taken from our Global Trend Map; a full breakdown of our survey respondents, and details of our methodology, are included as part of the full report, which you can download for free at any time.

So first up: which departments is product innovation currently coming from? …

The three highest-scoring departments were Underwriting (with 70% of respondents naming it), Pricing (55%) and Marketing (54%). Other areas that warrant mention were Actuarial (51%) and Distribution (36%). We noted in our earlier post on Marketing & Customer-Centricity that the roots of today’s consumer-led disruption are in the rise and ease-of-use of new distribution channels – so insurers that leave Distribution outside of their product discussions do so at their peril!

See also: Next for Insurtech: Product Diversity  

Which insurance lines are driving the greatest degree of product innovation?

In addition to seeing product as department-driven, we also investigated the extent to which it is line-driven. The chart below shows Auto (voted by 56% of respondents), Home (45%) and Health (41%) to be the three lines experiencing the most product innovation (according to carriers taking our survey). This is corroborated anecdotally by the sheer number of in-market IoT products we see across these fields, from in-car telematics through to smart-home controllers and connected-health armbands.

Life and Commercial are relative laggards in this regard, although we do believe there is ample opportunity in both these areas. This may follow the same pattern we identified with IoT (itself an abundant source of product innovation), where we saw platform implementation in Commercial currently trailing but quickly drawing level with other lines (see our earlier post on IoT). Regional trends for this question warrant some high-level comment:

Health is a substantial driver of product development for carriers in Asia-Pacific and Europe. In North America, however, it appears relatively insignificant

  1. Life appears tagged to Health in terms of how it trends regionally and is consistently the least innovative of the lines#
  2. P&C/General, Commercial and Home insurance are relatively consistent across our different geographies
  3. Auto is ahead among carriers in Europe and Asia-Pacific compared to North America

The relative prominence of the different lines, as well as the broad regional tendencies outlined above, remain the same when we widen our scope beyond carriers to consider the industry as a whole.

“The biggest risk the insurance industry faces when it comes to innovation is not taking enough risk. True innovation requires experimentation, which most of the time results in failure. Insurance organisations are built to eliminate failure from their culture. Without failure, you can have no innovation. CEOs demand a positive Return on Investment (ROI), they now need to seek out and understand what it means to have a positive Return on Risk (ROR).” — Steve Anderson, President at The Anderson Network

Human hand pointing at touchscreen in working environment at meeting

Key trends in the development of products

It’s clear from this section so far that product development is a strategic priority for a diverse spread of departments and lines. But how are insurers actually going about product development on the ground? Let us now present our trends on a number of product approaches that we identified among our carrier respondents: product diversification, Usage-Based Insurance (UBI) and product bundling/upselling.

“You don’t really have to invent new products in my eyes, you just have to make the existing ones easier and more ‘digital native’. Today’s products have been and are still created for non-digitals. And this situation not only makes new customer-facing digital processes complicated, it also makes core replacements and automation more complicated and expensive than necessary.” — Oliver Lauer, former Head of Architecture / Head of IT Innovation at Zurich

i) Product Diversification

The pace of change in the insurance sector is picking up, and many ecosystem players are quickening their iterations both on new and existing products in a bid to stay relevant.

76% of (re)insurers are pursuing product diversification as part of their organisations’ growth strategies…

This move towards diversification is not limited to any one kind of insurance market but is driving insurance growth all around the world.

It is naturally very important for insurers looking to break into totally new markets, as is the case in many developing economies, where traditional insurance products may be inappropriate for lower-income demographics (microinsurance being a case in point).

In mature markets, growth will come primarily from addressing existing demographics with more tailored products to fill in under-penetrated lines and segments; there is also the perennial threat that existing customers, tired of products that are suboptimal, will churn to competitors and new entrants who can offer better-suited ones. Whatever the market conditions, by trialling multiple products, insurers can both broaden their appeal and arrive at optimal products more quickly.

ii) Usage-Based Insurance (UBI)

The emerging generation of insurance products differ from those that have gone before in several key ways. One is the on-demand or usage-based component of new products – so that, rather than having idle and inflexible policies that subject the policyholder to the Tyranny of Averages, consumers can enjoy insurance-as-a-service.

32% of insurer respondents have a Usage-Based Insurance (UBI) strategy…

This trend towards Usage-Based Insurance (UBI) is a global one, and there was no significant regional variation across our three key regions. More information about UBI models can be found in our earlier Internet of Things section and in our section on Europe in the upcoming Regional Profiles.

“Most of the innovation in product development will happen where smart connected devices drive new business models based on behavioural data. I particularly expect improvements in pricing. UBI is a bigger game changer than covering events that are not insured today. In any case, there will be a huge need to understand, measure and manage rational and irrational behaviour.” — Andreas Staub, Managing Partner at FehrAdvice

iii) Product Bundling and Upselling

A key trend we have witnessed in other B2C industries, like Amazon and Netflix, is the rise of the recommendation engine. This is not just a core component of the customer experience but also an important enabler of new business, insofar as it lets companies push new products to customers that they are actually likely to want and to find useful. We also see this in insurance, in the form of data-driven product bundling and upselling.

47% of insurers have a strategy to bundle and upsell products based on customer lifestyle analytics…

Insurance has always had relatively few customer touchpoints, and even though insurers are now seeking to increase that number, insurance remains a product that is sold rather than bought. Taking full advantage of every selling interaction they have is therefore the surest way for insurers to increase their customers’ lifetime value.

Bundling and upselling products is – like diversification – a strategy with strong applications regardless of what sort of insurance market you are operating in. Whether your focus is to chase new customers or to retain existing business, it is better to reap maximum reward on each customer from the outset than to re-engage them (perhaps unsuccessfully) later on.

“The cost of customer acquisition is a critical metric for marketing efforts. Lifetime customer value also helps us know how much we should be spending to acquire as well as how we should expand our share of wallet within the products we offer.” — Michael Shostak, SVP and Chief Marketing Officer at Economical Insurance

See also: Insurance Product Development (Excerpt, Part 3)  

There are obviously many aspects of product development beyond diversification, UBI and bundling/upselling which we were not able to investigate directly. For this reason, we asked our carrier respondents to indicate additional product-development talking points in open text. Two key points that emerged across their comments were:

  1. The need to increase the service element of products, to keep up with evolving consumer needs and to drive customer retention
  2. The problem of constrained development resources, especially in expert personnel and IT

Now that we have worked our way through all our Key Themes, it’s time to move on to our Seven Regional Profiles, exploring on a geographical basis the stats and perspectives presented in the series so far. If you’d like to access all our Regional Profiles straightaway, then please feel free to skip ahead and download the full Trend Map here (it’s free!).