In a recent PwC study of global insurance CEOs, nearly two-thirds (59 percent) believe there are more growth opportunities within the insurance industry than three years ago. Yet, just as many (61 percent) see more threats to the industry than they did three years ago.
Why the duality?
As one insurance executive put it in a 2015 survey by Ernst & Young, “As an industry, we confuse innovation with product development…if we don’t learn the difference…and don’t learn how to become far more innovative much more quickly, we run the risk of being disintermediated by those that can run faster.”
Our lives are on-demand, online, and changing quickly. According to PwC, besides increased industry regulations, the second largest disruption recognized by global insurance CEOs is “changes in customer behaviors.” Yet the insurance industry has been slow to adapt to this changing reality. Over-reliance on legacy processes and outdated technology, and a lack of genuine customer understanding, have ostensibly stunted insurance’s ability to capitalize on innovation opportunities.
But customers themselves are an enormous source of growth for global insurers. If they can work with customers to gain a complete understanding of their lives, then insurers can more firmly grasp what’s motivating those changing behaviors. From here, they can begin to shape their business around – and quickly evolve with – customers’ needs.
Some are already doing this by making ongoing customer engagement a strategic imperative. Inviting customers into the business and partnering with them is working to great effect; it’s helping them genuinely “get” the people they insure. Here’s how.
Understanding customers, inside and out
The two most important steps insurers can take to improve the customer experience, according to a separate PwC survey of global consumers, are greater accessibility and tailoring to customers’ needs. But before tailoring experiences to needs, insurance companies first need to understand exactly what those needs are.
Aviva, the UK’s largest private insurer, saw an opportunity to innovate its small business insurance offering for a new breed of empowered small business owners. Through exploratory work and a series of innovation and co-creation sessions with C Space, Aviva and brokers got to know small business owners holistically – both in the context of their business, and outside of it.
The work revealed a key insight: small isn’t simple. Small businesses are varied and complex, and owners need insurance options that fit their needs exactly. For example, a sole proprietor electrician described how his main job is to change lightbulbs at a nuclear power plant. But operating near high-grade uranium makes getting insured hellish, to say the least.
Stories like this brought modern small business owners to life, retired long-held assumptions, and guided the design of new insurance options tailored to meet customers’ needs. As a result, Aviva now leads the market in insurance products and services for small businesses.
Rewriting the rules of customer engagement
Insurance has traditionally been a one-and-done product to sell. Customers need it, so they buy it; however, most rarely engage with the insurer, other than at the time of initial purchase or claim.
But a “low engagement” product has disadvantages. Satisfaction surveys won’t reveal customers’ lives inside and out, nor will they answer the questions insurers didn’t know to ask. So how do insurance companies get people enthusiastic enough to participate in sharing their thoughts and ideas around an “unsexy” topic like insurance?
Life insurance customers constituted a considerable segment of Zurich Insurance’s USD $70 billion in annual revenue. To grow that part of the business further, Zurich wanted to connect to a niche, hard-to-reach audience: affluent global jetsetters, many of whom in certain markets relocate every few years.
To motivate these customers to participate, Zurich invited them in as strategic product development advisors in seven global markets. The engagement was designed to be fulfilling and exclusive, a premier extension of the value customers were already receiving from Zurich Global Life. Members took part in everything from on-the-go ethnographic work to live discussions to large, ongoing strategic projects. And every member was greeted and kept apprised of their work’s progress via regular videos from the Zurich CEO. Today, Zurich Global Life is creating significant business impact as a result.
A customer-inspired culture shift
New and enhanced products and services are no doubt valuable. But innovation in its truest form can only come from a radical shift in the culture of the business. This starts with customer inspiration; it creates buy-in, provokes change, and instills customer empathy in the minds, and actions, of stakeholders. And, can all be tied to measurable ROI – a necessity for the numbers-driven insurance business.
Aviva and Zurich Insurance are proof that being an opportunistic customer-inspired growth engine works. Both are transforming from product-driven to customer-centric. Aviva now uses tangible customer narratives to help employees to see, feel, and internalize the life of the customer, and has even introduced a focus called “Customer” into its commercial business unit. At Zurich, reminders of the customer are shared easily, and at all levels, as “postcards to the CEO.”
Insurance companies are designed around people. The insurance companies that are embracing those people as opportunities are creating new value in a disrupted global marketplace.