Getting the World to Fall in Love with Insurance

Insurance has gotten a bad rap.

This isn’t exactly new. Back when fire insurance first started, insurance providers had their own fire brigades that would watch a building burn if they arrived and found it wasn’t insured. The industry has come a long way since then, but the perception that insurers are ‘out to get you’ remains.

How many people complain of exorbitant policy charges or wholeheartedly believe that insurance companies will find any excuse to reject a claim? ?

Not exactly fertile ground for nurturing brand love. And yet, this image problem shouldn’t exist at all. Insurance is an industry whose very foundation is based on helping people through the challenging moments of their lives, yet it’s seen as the ultimate grudge purchase for consumers.

For years, the South African insurance industry has been laser-focused on customer-centricity, often adopting new technologies and distribution channels before the rest of the world. Like the banking industry, insurance providers are at the forefront of digital transformation and data analysis. So why is it that around 70% of cars in SA are uninsured? Why do fewer than 20% of South Africans have a medical aid?

Simple is Just the Start

There’s a universal recognition that insurance needs to lose the complexity and offer simpler, frictionless products to shed its reputation. Seamless onboarding and sign-up is quickly becoming the industry norm as a result.

In 2017, Simply launched an online platform for life, disability and funeral cover that enables customers to buy insurance products in just three minutes. Meanwhile, aggregators like Hippo have played a huge role in bringing transparency and simplicity to the quotation process.

In the United States, start-up Lemonade is getting rid of the paperwork altogether, allowing customers to sign up for insurance via an app in as little as 90 seconds. Customers have a conversation with a chatbot, who creates a tailored policy for them based on their responses. The use of AI doesn’t just stop there — Lemonade uses machine learning to assess claims.

It’s not just customer touchpoints that need to change, however. The problem with the traditional model of insurance is that profit depends on paying out as few claims as possible, which is often at odds with the needs of the customer. It doesn’t matter how simple the process is or how personalised your premium is: if a customer feels they’re getting nailed when they try to claim, all your brand-building work will be for nothing.

This is the hard truth that the constant conversations of customer-centricity in the insurance industry doesn’t always acknowledge: that the revenue and operational models themselves aren’t necessarily designed to support the people at the other end of the claim. And until that changes, customers are still going to treat insurance like a grudge purchase.

I’ll Be There for You

What does a more human-centric insurance model look like? For some providers, it means reimagining their revenue models to take advantage of the possibilities of digital. Naked, an AI-based car insurance startup, puts its premiums into a pool to cover claims. At the end of the year, any money left over in the pool is given to charities nominated by customers, which means the company’s profits don’t depend on whether claims are paid or not.

Pineapple’s model works along the same lines, with premiums going into a network of wallets belonging to members. This network pays for any claims and the money that is left in each members’ wallets at the end of the year is kept by the members.

Others are redesigning their entire value propositions to play a more central role in their customers’ lives. The obvious example of this is the Discovery Group, which continuously finds ways to bring value to its customers’ lives outside of the traditional area of claims. Discovery is using technology to bring its Vitality model outside of just health and wellness. Insuring your car, for example, offers the possibility to add a device to your car that tracks your driving for fuel rewards and warns you of bad weather.

In other words, the insurer you fall in love with is a value aggregator rather than a faceless entity that pays out (or rejects) claims when things go wrong. This means embracing three key approaches:

• Inclusiveness is a Win-Win Scenario: Minimising risk for the customer means minimising risk for the business, and the best way to avoid paying out a costly claim is to prevent it in the first place. Insurers need to welcome customers and use the rich data available to them to reduce risk and encourage good behaviour rather than exclude customers.
• People Like Someone They Can Count On: Financing a vehicle or taking out a home loan may be just as complex a process as taking out an insurance policy, but the reward is a car or a house at the end of the day. Insurance needs to advocate for its own value outside of the moment of paying out claims, offering on-demand living services.
• The Opportunities of Everyday Insurance: Becoming value aggregators in different aspects of their customers’ lives means insurers have a much more diversified ecosystem from which they can find revenue. Whether it’s offering new value-adds as part of their offerings or creating valuable partnerships with supermarkets, petrol stations, financial service providers and more, there’s an enormous amount of profit to be made.

Bringing the insurance industry into the future is about more than just offering tailored premiums or allowing people to claim using an app. It needs to be about creating a unique and ongoing value proposition for each and every customer. It needs to be about finding smarter, more proactive ways to minimise risk through technologies and business models. It needs to be about creating positive experiences as much as minimising the negative.

Isn’t it time we found the humanity at the heart of the industry and reminded everyone why insurance is such a force for good in the first place?