Focus On Community Life Insurance – While other industries are focused entirely on providing a superior customer experience, the product and pipeline development process in the insurance industry lags behind. It’s time to catch up.
At a time when exceptional customer experience is prevalent in most other industries, customer focus, speed and flexibility are becoming essential in insurance product development. As companies like Amazon and Netflix raise the bar on consumer expectations for convenient, fast, and personalized products and services, providers of the future may have to follow suit. And for all intents and purposes, this is the future.
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The good news is that the insurance industry in general, and those targeting the small business sector in particular, seem to be coming to terms with this new reality. Many customers are building business models based on outdated products to meet market expectations based on customer experience.
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Easier said than done. Time to market and capabilities remain slow and difficult to develop insurance products due to regulatory oversight, legacy infrastructure, business units and operational silos, and outdated processes and cultures. long. The challenge can only grow as the speed of digitalization accelerates, customer expectations continue to rise, and traditional business lines continue to blur.
Interviews with small business insurers and InsurTech product development leaders in the US and Canada revealed a keen awareness of these challenges. However, real change is still slow, although the focus on product and service innovation seems strong. With new risks emerging and traditional coverage requiring updates to stay relevant in a changing environment, the need for faster change in product development seems to be intensifying.
Contractors may be tasked with eliminating or mitigating conflicts between models, processes, and infrastructure. This may require rethinking industry practices, such as the potentially burdensome and confusing application process that small business owners may face when trying to obtain a policy. Instead, insurance must evolve to create a more streamlined, customer-focused experience that includes personalized options and services, which is common to most other industries. This article examines a number of strategies insurers can consider to achieve these goals, including many that pioneering organizations are currently implementing.
For small insurance companies, external dynamics and internal company desires are the main driving forces behind product change (Figure 1).
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Looking at the external world, most customers expect service anywhere, anytime, and on any channel. They also need products that can be turned on or off as needed in real time. These are key considerations for insurers looking to innovate their products and business models, according to several small business product managers interviewed.
The leader of the small business insurance market believes: “The demand of the small business customer is: ‘I hope you have it, I want you to cover me, and I want the information at my fingertips 24 /7, even in the commercial sector. .'” An executive at a large business said: “The driving force is the customer’s expectations of the user experience: the changes that occur around the services available. anywhere, at any time and people’s expectations about their ability to buy products more in line with the period that can affect the policy every year’.
Driven by competitive industry pressures and the success of non-traditional players in establishing digital channels, even providers tied exclusively to intermediary networks are exploring opportunities to offer more distribution options. One insurer said: “I’ve seen an increase in requests for ‘give me the information’ – ‘I want to see it myself’ – ‘I want to be able to process my insurance.’
From the company’s internal perspective, leaders seem focused on the pursuit of market share. It’s no surprise that this segment seems so out of control: 40 percent of small businesses in the United States do not have insurance.
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One contractor suggested, “The shift from a product-based model to an experience-based model will create more opportunities to gain market share than we’ve seen since the inception of the first American insurer to offer fire policies in the 1700s.”
There was a general consensus among respondents that digitization and digitization would result in lower coverage costs. A leader at a major insurance company stated, “You start to see opportunities to build protection around displays that you couldn’t in the analog world because the cost of coverage may have exceeded the coverage. In the world It’s digital that’s changing and we’re starting to understand that.” , and that drives the pressure for product development.”
In addition, many emerging phenomena have emerged (Figure 1), such as cyber risks and the booming cannabis industry, as well as the violation of private and commercial channels of distribution. and the gig economy. Contractors are trying to determine if and how to take advantage of these emerging opportunities. According to one insurance product development leader, “The changing environment creates coverage gaps that create opportunities for product development.
If insurers do not meet the demands of the emerging industry, there is a greater risk that dollars will be diverted to other markets. Such was the experience of property losses, where innovation took place outside the insurance industry, shifting a large part of the market to the capital market with the creation of cat bonds and parametric products. .
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With few exceptions, respondents’ consensus was that it typically takes 12 to 18 months to develop and launch a new product and three to six months to modify existing coverage. In the age of instant gratification and dynamic markets, these deadlines are no longer possible.
Insurance may need to eliminate or minimize friction in the entire value chain, from product design to implementation and customer engagement, to meet customer needs and affordability. market in a fast and efficient way. Making these changes requires cross-functional teams to work more smoothly. Companies may also need to align with external business partners, such as data providers and service providers, as the ecosystem of product and service offerings becomes more integrated. Although product innovation initiatives can be implemented simultaneously or sequentially, they are prioritized in line with the company’s overall strategic approach.
To move from a product-centric mindset to a customer experience-based business model, entrepreneurs may have to redesign cumbersome processes, simplify products, increase flexibility policies, promote digital communication and expand sharing opportunities. The product development framework (Figure 2) shows how this works.
In order to increase efficiency and speed of product development in the market, insurance companies must focus on breaking down the silos between lines and routine operations, working with adjacent industries to promote product and service innovation. culture to attract the right talent of the future.
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While the interviewees represented entrepreneurs at various stages of change in product development, from early adopters to early adopters to late adopters, all agreed that the die was cast. Business as usual can be the last resort for those with their heads in the sand.
Below are potential tactics and real-world examples of entrepreneurs taking steps to address key points in the current model to achieve customer experience-based goals.
Conflict: Obscure legacy infrastructure: A challenge common to most respondents is having outdated technologies and platforms. These systems, often with little innovation over the years, continue to hinder the ability to improve product development and user experience for customers, intermediaries and other environmental stakeholders.
Strategy: Depending on the project plan and budget of the operator, such friction reduction can be as broad as starting a complete overhaul of the technology system or as targeted as aligning one or more third-party vendors to use the new technological possibilities.
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Pinnacol Assurance has developed a digital workers compensation platform, CAKE, to offer policies to small businesses online. The platform is simple, fast and responsive to each customer’s needs, minimizing the hassle and complexity of meeting customer needs. This allows small businesses to easily purchase workers’ compensation in three to five minutes, compared to days or weeks for traditional carriers to complete the process.
Instead, there is advanced technology that can integrate with other sources to achieve more consistent and accurate coverage and pricing. Best of all, it can help pre-populate customer profiles, making the application and onboarding process faster and easier. Additionally, having the ability to mine other data for use alongside the wealth of data providers have already collected from customers can help them better understand customer needs and pain points. Others may be building digital distribution capabilities to meet the growing demand for digital purchasing options among small business customers. Replacing or supplementing legacy systems with such advanced technology can help reduce complex processes such as development, manufacturing (engineering) and testing of new or improved products, potentially shortening time to market.
A big part of improving product development is simplification