Tag Archives: the new insurance customer

Digital Playbooks for Insurers (Part 3)

In our last two blogs, we discussed why consumer playbooks and SMB playbooks have such an effective application for business. Insurers, especially, can use the idea of a playbook to put together a package of viable “plays” that will help them on their shift from Insurance 1.0 into Digital Insurance 2.0 — the second wave of technological and business model advancement within insurance.

In our pregame analysis, we looked at Majesco’s research into consumer and SMB behaviors and expectations. In this blog, we’re going to look specifically at the kinds of offerings that may be ideal for consumers. Of course, we won’t be developing low-level product detail, like an insurer would. Instead, we’ll connect high-level consumer indicators to the types of product and service attributes that could yield insurer differentiation and advantage.

New Consumer Behaviors and Expectations

Across all businesses, including insurance, disruption and change is driven by people. At its simplest, an offering can be created in two ways. First, we might observe changing behaviors and unserved or underserved needs that people have in today’s digital world to come up with an innovative idea that improves outcomes. Second, we might develop a new idea through some other inspiration or observation that meets a need or expectation — one that people didn’t even realize they had until the new idea came along — like Steve Jobs famously did at Apple. With either of these, we can create a value proposition that supports a new Ideal Offering.

See also: Digital Insurance 2.0: Benefits  

In 2017, Majesco set out to confirm consumer trends, across generational segments, looking at the attributes of new products and new business models in the marketplace. Using data from our 2016 research, we gauged increased use of new, digital activities that are influencing expectations and behaviors, highlighting year-over-year growth in today’s consumer practices.

The results can be found in our thought-leadership report, The New Insurance Customer — Digging Deeper: New Expectations, Innovations and Competition; a synopsis of areas of digital impact would include:

Sharing Economy: Ride-sharing, home-sharing and room-sharing are on the rise.

Connected Devices: Fitness trackers are gaining incredible traction across all generations. Telematics, though maturing, are still increasing in growth, especially among Boomers.

Payment Methods: Both use of company app payments (Amazon, Starbucks, etc.) and ApplePay and SamsungPay saw strong year-on-year growth among Gen Z and millennials.

Channels: Across all generations, 22% to 38% of individuals purchased insurance from a website.

Products: Between 25% and 30% of individuals had purchased on-demand insurance in 2017.

Other Emerging Technologies: Items such as drones and 3D printers are growing in use.

If we were in front of a whiteboard, we might use a word cloud to place some of these capabilities side by side and in groupings. For the purposes of the blog, we’ve created a list with many of the relevant concepts an organization will find, that will touch or likely touch Digital Insurance 2.0 offerings. This is the type of exercise that insurers may want to use during product brainstorming sessions. Included in the list are both the technologies themselves and the contexts that will drive the use of these technologies. In creating an Ideal Offering, insurers will want to take many of these capabilities and context drivers into account.

  • On-demand
  • Sharing
  • Telematics
  • Fitness tracking
  • Property monitoring
  • Pay-as-you-go
  • Mobile account management
  • Digital security
  • Digital assistant
  • Bundled insurance
  • Data-driven pricing
  • Gig employment
  • Peer-to-peer insurance
  • Artificial intelligence
  • Preventive services
  • Mobile messenger app-based communications and transactions

Given the pronounced generational patterns identified in Majesco’s research, it becomes clear that Ideal Offerings must take into account that different market and product strategies are necessary for each generation. To facilitate this thinking, we developed generational playbooks that summarize the attributes (the “ingredients”) that constitute the ideal insurance offerings (“the innovations”) for each segment (the “recipe model”).

We also identified behavioral targeting opportunities for specific product, service and process offerings for sub-segments within the generations, based on experiences with certain technologies and trends. Here are just a few of our findings:

Gen Z Offerings

Gen Z tops the list for groups that are ready to purchase Digital Insurance 2.0 offerings. These offerings would use highly ranked attributes such as preventive services, rewards-based products, messenger apps, mobile quoting, charitable sharing, on-demand products, bundled products and usage-based products. They are also a prime market for targeting products based on usage of new technologies. For example, those Gen Z members who use fitness trackers (41%), are more interested in having health and life insurance premiums that are partially based on their tracking data. They are also willing to join an affinity group that shares their interests, especially if it helps them reduce the cost of insurance.

So, an insurer trying to identify an Ideal Offering for Gen Z should consider that real-time, personal data tracking tied to fluctuating usage and variable-premium products (premiums based on behavior/activity levels) may be highly attractive to this group. And on-demand products fit their lifestyle needs. They are the industry’s newest buyer that aligns with the new products and models, reflecting the opportunity to capture and engage them today as they emerge as a dominant buyer.

Millennial Offerings

Millennials are likewise open to having personal data drive usage-based insurance. They are mobile users who will be happy transacting via messenger apps. They like the idea of telematics-based auto insurance. They like on-demand offerings and any service that can prevent or minimize accidents and claims. They are willing to share their data if it improves pricing and service. If they have ever used a device that monitors driving, they are highly likely to consider on-demand, device-tracked insurance for other areas of insurance.

Because millennials are also experience-seeking consumers, an insurer looking to capture millennials may want to create products that match up with experiences and trackability. Marine insurance, motorcycle and ATV insurance and any products that can employ both telematics and a mobile-based on/off switch will be highly valued. Because personal watercraft and ATVs are often rented and borrowed instead of owned, on-demand personal liability insurance could be an excellent product, sold both D2C and through rental companies.

In general, all generations, including pre-retirement Boomers, are showing signs that using insurance to cover an event with a specific duration will be a desired capability.

See also: Global Trend Map No. 6: Digital Innovation 

Gen X Offerings

There is really very little difference between Gen X consumer desires and those of millennials, reflecting the rapid adaptation to digital by this generation. However, there is greater growth in the Gen X segment regarding mobile payments. Year over year, more of the Gen X cohort paid for transportation through a ride-sharing service like Uber or Lyft, and more of them began using ApplePay and SamsungPay. Though some of this is driven by work/life maturity and lifestyle, it shows a general acceptance regarding mobile transactions and a desire to make transactions as simple as possible.

Ideal Offerings for Gen X will concentrate highly on ease of use and seamless functionality between quotes, admin, payments and claims. Much of this, clearly, is less product-based and more service-based, but when it comes to Digital Insurance 2.0, the two should never be separate considerations, rather should be an integrated offering. Back-end capabilities, front-end digital capabilities and lifestyle-relevant products are all part of the same agile environment.

Pre-Retirement Boomers

It was once thought that pre-retirement Boomers would simply be happy with traditional insurance products serviced in traditional ways. Once again, active lifestyles and our research are proving this to be false. The greatest jump in online insurance purchases falls within the pre-retirement Boomer segment. Because they tend to drive fewer miles, they have also latched onto the idea of usage-based auto insurance, leading the wave of growth in this area as well. Year over year, they are using substantially more fitness trackers, 3D printers and drones — and they are much more likely to have worked as an independent contractor or freelancer. This is not your previous generation of retirees!

Because they tend to travel more, they are excellent candidates for property-monitoring devices as well as on-demand insurance. They want to protect their earnings, so they are price-conscious. When we tested business models against generational segments, pre-retirement Boomers were highly receptive to online life insurance products that included quick quoting and simplified issue.

“DIY” Ideal Offerings for Insurers

Ideas are business tools. They are just as important as systems and processes. Ideas, however, rely on capabilities. Insurance offerings are obviously constrained or enabled by the digital readiness of an insurance company. In other words, to make the playbook work, there must be a foundation in place. For insurers, that foundation is Digital Insurance 2.0.

Digital readiness opens insurer doors to rapid testing of ideas and rollout. It allows a greater amount of freedom in product development, easier business configurability and exponentially better data gathering and digital service. Digital efforts provide speed to value, converting ideas to offerings while opportunities are fresh.

In our next blog in this series, we’ll look at Ideal Offerings within the SMB market.

A Great Year for Digital Resolutions

When it comes to thinking about 2018, you may have already set some company goals and feel that your plans are in place. Implementing plans, however, can be difficult, and every plan has a tendency to change over the days and months that it grows into a reality. New Year’s resolutions may not be the answer to all of your future issues, but they may help you to maintain focus on important end goals.

If you want to see your organization adapt to new market drivers, remain competitive and relevant, and position for growth in the Digital Insurance 2.0 world, consider these six areas as New Year’s Digital Resolutions.

We Will Focus Forward

The most important high-level resolution an organization can make will be to focus on the future by rapidly moving from Insurance 1.0 to Digital Insurance 2.0. Your Insurance 1.0 business model will continue to be valuable for meeting the traditional needs of your current customers. But Digital Insurance 2.0 is rapidly emerging with new business models, products and processes that meet the needs and digital expectations of a new generation of insurance buyers. The digital future is exciting, compelling and important enough to begin aggressively preparing for a new future of insurance and cutting our mental ties to many of our sacred past assumptions and philosophies.

See also: 4 Ways That Digital Fuels Growth  

We Will Wake Up to Shifting Customer Behaviors

What caused some insurers to be slower on the digital uptake in 2016 and 2017 was a general lack of understanding of the shift in customer expectations, among both consumers and business owners. Many insurers didn’t think that growing customer trends would dramatically alter their own products and services — or that customers were going to play such a large role in pushing technology adoption. They didn’t foresee that customers’ digital utilization would affect all industries, rewriting the idea of competition and removing any sense of loyalty and security.

Now, that’s history. Technologies allow startups to compete using customer-centricity, as opposed to products, as their value offering.  And a new insurance paradigm is being crafted regardless of whether incumbent insurers choose, or are able, to play to compete in the era of Digital Insurance 2.0. For reference on just how deep these changes go, be sure to read Majesco’s research report, The New Insurance Customer – Digging Deeper: New Expectations, Innovations and Competition. Look for our research report on small-medium businesses later this month.

Every day in 2018 and beyond, we should attempt to be sensitive to the power of consumer opinion and behavior that will affect insurance. Our newfound sensitivity will allow us to become more innovative as we match our new technologies to consumer desires.

We Will Pursue Speed to Value

The best New Year’s resolutions are those where constant application will provide clear impact. When insurers link business drivers to cloud business platform capabilities, they can begin to prioritize their efforts based on speed to value and a logical progression toward digital expertise.

Realizing business value sooner with iterative rollouts is the essence of speed to value, a defining competitive element in the digital age. This includes speed to implementation, which provides the ability to get up and running in weeks or a few months versus years; speed to market, where you can rapidly develop and launch new products or enter new states with ready-to-use rules and tools; and speed to revenue, which rapidly enables business growth with minimal up-front cost. Speed to value is redefining a new generation of market leaders that leaves traditional, slow-to-respond business models increasingly at risk of irrelevance.

We Will Build to Flex

Homes and buildings in earthquake-prone communities are now built or retrofitted to withstand the unexpected tremors (and risk) that would crack traditional foundations. Insurance can take a lesson from earthquake-proofing. Our operations are similarly prone to other kinds of “earth-shaking trends” and risk that require the business to flex without breaking.

Digital preparations must consider the unknown future. In everything insurers do, they should be removing rigidity and replacing it with agility and flexibility. Emerging technologies and connected devices will be adding value to insurers’ abilities to protect customers and compete with startups. But these technologies will only yield benefits to insurers that can quickly and efficiently plug them into a “find and bind” architecture on a cloud business platform to beat out competitors with new service offerings. The same digital preparations apply to channel development. An omnichannel presence is a digital one, providing seamless customer experiences.

We Will Look for Greenfield Opportunities

Market opportunities are all around, emerging rapidly in a fast-changing world. The intense industry disruption from changing customer expectations, advancing technology and shifting market boundaries creates risks and opportunities that many startups and greenfields are taking advantage of. Likewise, a growing number of existing insurers are incubating new ideas and products to spur innovation and gain market insights and advantages. These opportunities are within growing segments that are underserved or unserved for both P&C (personal and commercial) and L&A (individual and group/worksite) market segments. For a deeper view on these opportunities, read A New Age of Insurance: Growth Opportunities for Commercial and Specialty Insurance in a Time of Market Disruption and the coming A New Age of Insurance:  Growth Opportunity for Employee and Voluntary Benefits Insurance in a Time of Market Disruption reports.

See also: What’s Your Game Plan for Insurtech?  

Traditional insurers are finding that the best way to compete with startups is to be one — forming greenfield businesses that launch outside of current systems and processes for rapid product development and market testing. Life insurers, for example, are ripe for greenfield developments that include digital products that leverage fitness trackers and mobile communications. Mass Mutual’s startup, Haven Life, and John Hancock’s Vitality products are examples of insurers reaching new market segments via a new brand or new products. For an expanded view of greenfield developments in insurance, read Greenfields, Startups and InsurTech: Accelerating Digital Age Business Models.

We Will Embrace the Platform Economy and the Shift to Digital Insurance 2.0

The next generation of core, digital and AI, cloud computing and partner ecosystems have opened a door for insurers in the platform economy, creating the art of the possible by enabling agility, innovation and speed in a time for rapid market changes. Cloud deployment of digital-ready systems can unify an insurer’s environment and prepare it for growth. Just look at the growth and value of other companies using a platform model, such as Apple, Uber and now Lemonade.

The benefit of cloud platforms is in full swing, but from a utilization perspective the insurance industry is only scratching the surface. For insurers preparing “digital first” business models, new products such as pay-on-demand, pay-as-you-use or pay-as-you-need will require the shift to cloud business platforms. The hallmark of a cloud business platform as a new business model paradigm is collaboration via data and information sharing and subscribing (not owning). As a result, traditional boundaries between insurers, partners, third parties and even other industries are being replaced with market dynamics that open doors to improved operations and revenue outcomes.

On behalf of everyone at Majesco, I sincerely wish you and your organization a Happy Digital New Year!