Insurance must rethink its role as ‘traditional premise’ is no longer enough: survey

Consumers expect insurance companies to act on the world’s biggest challenges, like climate change, an aging population and gaps in healthcare. They also strongly want to reduce the risks in their lives, according to the Bain and Company survey.

The majority (80%) of consumers said they want insurers to integrate environmental, social and governance (ESG) initiatives into their proposition. More than half (59%) would like insurers to reward them for leading a healthy life.

Although respondents expressed an overwhelming preference for risk prevention services in auto, home, life and health insurance, few use current market offerings.

Only 4.3% in the US said they took the services of their insurers, while the numbers were dismal for Singapore (4.1%), Switzerland (2.7%), Japan (2.5% ) and the United Kingdom (2.1%).

Bain and Company, a global management consulting firm, commissioned the survey from Dynata, which surveyed 28,765 respondents in 14 countries.

“Consumers need more. He [traditional premise where] insurance just provides capital to cover losses is no longer satisfying,” Tanja Brettel (pictured above), Bain and Company executive vice president of practice, said at the Insurtech Insights Europe conference in London earlier this month.

Turbulence and uncertainty accelerate consumption changes

Consumer interest in ESG has increased in part due to the intense turbulence and uncertainty of recent years, according to the Bain and Company report.

“Extreme weather events, disease and the covid-19 pandemic, population aging, and technological disruptions are combining to radically change the risk landscape, both through more risks and through different types of risks,” he says. The report.

The confluence of all these factors has triggered an identity crisis for insurance companies as they face increased demand for what Bain and Company calls the “functional elements” of their value proposition.

Reducing risk, providing ease and convenience, and paying claims are just a few of the top offerings consumers expect from their insurers. But companies must quickly evolve to deliver better social impact, life-changing, and emotional value to stay relevant.

“It is very difficult to get the basics right. But consumers still want more,” Brettel told the audience at Insurtech Insights Europe.

“They want to be rewarded, they want businesses to be ethical, and they want their insurance company to invest in their well-being.”

Why don’t they connect the risk prevention services of insurers?

Risk mitigation and prevention is the new frontier for insurers, according to the Bain and Company report. But if consumers want to be proactive in reducing their risks, why not take advantage of the services of their insurers?

It could be because many risk avoidance offerings focus on the insurance policy rather than the customer, Brettel said.

A case study has shown the power of an insurance service that keeps the focus on the needs of the client. Life and health insurer AIA’s Vitality app had more than 300,000 subscriptions in the first year of its launch. The app, which caters to young families in Thailand, offers wellness information, family event and immunization trackers, and online forums for parents.

“They started with the customer, and not thinking about ways to bring their products to the world. They chose a segment with unmet needs and tailored their offer around it,” Brettel said.

From the “push” to “pull” distribution model

As insurers redefine their role and value in the marketplace, agents and brokers have a key role to play.

According to the Bain and Company report, carriers will need to shift their distribution model from “push” (which focuses on acquisition) to “pull” (which uses data and analytics to address customer needs and priorities).

This means that brokers and agents will see their ways of working change dramatically, spending less time on low-value tasks and focusing on building relationships with their trading partners.

“In many markets, the traditional sales force plays an incredibly important role, not only in driving adoption, but also in creating more sales and converting from online to offline,” Brettel said.

Redefining the role of insurance

The shift to risk prevention and purpose-driven business will take time for most organizations. Brettel warned leaders that they should not expect an immediate return from this turnaround. But he stressed that the long-term result will be worth it.

“Don’t expect it to be profitable in the first year. It takes patience to build that. The important thing is that you focus on defining what your path to monetization is,” she said.

“It’s all about the customers. It’s about redefining the value you offer to customers. Customer convenience should be front and center.”

Do you agree with Bain and Company’s findings on insurance customer expectations? Share your thoughts below.

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