The insurance industry has changed a lot over the years. Technology has allowed for innovations that have helped create more efficient, scalable, and reliable ways of doing business, but the industry still lacks in some key areas. As a leader or an innovator looking to transform this space, there are at least six ways you can help transform the insurance industry today.
1) Embrace design thinking
The insurance industry is filled with experts who understand the ins and outs of policies but often fail to understand the actual user. Design thinking can help insurers look at customers' overall experience with an organisation instead of focusing on individual policies or products.
Design thinking is a creative problem-solving method widely employed in many industries such as education and healthcare but has not been fully adopted by the insurance industry. This approach uses empathy to understand users before ideating and prototyping solutions. In other words, it's about building for the consumer rather than building for the industry.
2) Provide them with tools, not problems
"People today aren't looking for companies to plan their lives," wrote Mark Duffey, an insurance industry leader for the Globe and Mail three years ago, "they want tools that help simplify their lives in a world of complexity." That remains true today.
In recent years, however, many insurance companies have taken significant strides to simplify the customer experience. For instance, many companies have started embracing digital channels for a more efficient path-to-purchase and enhanced customer service beyond just selling a product or policy. Insurers may need to examine how other industries have successfully used technology to transform the game. For instance, companies like Uber and Airbnb are taking on established incumbents by offering different services without creating a new product or policy. Can insurers do the same?
3) Deliver services, not products
Traditionally, the insurance industry was built on selling products. This approach might have worked in the past, but in today's world, buyers want to do business with organisations that can offer them more profound value and services.
This shift in mindset has forced insurance companies to look at their product offerings differently because they need to focus on the customer experience instead of just selling a policy or an add-on (e.g., extended warranties). Ransomware, for instance, has in recent years emerged as a growing threat to insurance companies, raising questions on the viability of standard products and services.
"The industry struggles with higher-than-ever insurance payouts to policyholders hit by ransomware and grapples with how to handle this growing risk," wrote Jessica Lyons Hardcastle, managing editor of SDxCentral, earlier in August.
"One insurer, AXA France, recently announced that moving forward, it won't reimburse ransomware payments for new policyholders within the country," she added.
But what can insurers do differently to deliver services, not products?
Insurers can build a different approach around how they look at their product offerings. Instead of focusing on selling products, the industry can focus on delivering services that help customers solve their pain points. This means looking at areas such as risk assessment and protection that go beyond the product itself. In the ransomware case, can insurers do more to help stop the problem before it occurs? What are other examples of services that can be offered by insurance companies today? Can we use design thinking to develop an innovative solution that provides users with real-time protection from such risks?
4) Build partnerships, not barriers
Do you know that 93% of the UK's insurance population is white, and only 1% identifies as black? Women are also underrepresented. There is only one woman out of ten men in 18% of the UK's insurance companies. The lack of diversity in the insurance industry is alarming and prevents it from meeting consumer needs that are not being met by people who look like them or share the same experiences. The good news is some companies have already recognised this problem, taking concrete steps to address it. One of the most prominent companies is Allianz, which has the following six programs to meet its diversity and inclusion goals:
- Allianz Beyond: to increase employee awareness about disabilities in the workplace.
- Allianz Neo: to achieve gender balance in the company's workforce.
- Allianz Pride: to create a culture of diversity and inclusion for LGBT employees.
- Allianz Grace: to reduce racial inequality and bias in the workplace.
- Allianz Engage: to strengthen age equity in the company's workforce.
On September 21, Dive in Festival for Diversity and Inclusion in Insurance held its annual event where industry professionals came together to help address the lack of diversity and inclusion in the insurance industry.
5) Make things simple
Duffey noted in his article that there is a widespread misconception in the insurance industry that the more complicated a service is, the better it must be. This couldn't be further from the truth.
"People want simplicity," he wrote. "Especially millennials." Customers should understand how your products work and what you're going to do for them without reading a 100-page legal contract. You can achieve this, for example, by making things as visual as possible using infographics or other design-oriented tools.
6) Innovation is key
Everything comes back to being on the cutting edge. The industry is moving from a traditional, rigid business model that focuses on selling products to more of an agile model that allows companies to innovate and adapt faster than ever before to remain relevant in today's marketplace. The insurance market has long been considered primarily focused on risk management rather than growth or innovation. That's no longer the case, and insurers that fail to recognise this will be left behind.