Re-designing the experience of insurance
A talk by an experience designer at Liberty Mutual
As someone who’s interested in the topics of experience design and reinvention of industries, one of the most interesting keynotes I found at the BarnRaise design conference held at IIT Institute of Design in mid-October was one delivered by Rob Moore, an alumnus from the Institute of Design and who is working as an experience designer at Liberty Mutual, one of the top providers of insurance in the United States. The topic of his keynote was on re-thinking the role of insurance in people’s lives.
Rob started by showing a photo of houses being built for victims of Hurricane Katrina and asked the audience:
who do you think paid for the reconstruction of these houses? While most people think of insurance as monthly bill payments that gives you money when your house burns down or your car crashes, it is really a platform that provides you with confidence to take chances in pursuit of your dreams. And if you stumble, someone will be there to catch you.
A designer’s job is to understand what really matters to people. Rob started by sharing an anecdote on how his team went about this task. They literally went to a customer’s house, handed them a cardboard box, and told them that they had three minutes to abandon their house and take their most treasured possessions with the box. As the team analyzed the contents of the box, they discovered that aside from items that had high financial value like jewellery and cash, there were lots of items with high sentimental value, such as photographs and old CDs. This was an eye opening experiment as the team realized that people place just as much value on their possessions with high intangible value as possessions with high tangible value.
With recent technological advances that is providing us with virtually unlimited storage capacity and 24x7 connectivity, more and more of our tangible possessions are becoming digitized: photographs, videos, documents, music. Considering that insurance is really providing people with the confidence in case something were to pose a threat to their belongings, guess who else is providing such confidence? Cloud storage that backs up all your important files like Dropbox. Putting it all together, Rob created this chart:
In the second part of the keynote, Rob talked about three key trends that’s changing the the insurance industry:
Car insurance makes the largest portion of insurance companies’ revenue. Once self-driving cars become commonplace? Where will insurance companies find a new source of revenue.
Telematics is a kind of a personalized car insurance that adjusts your premiums not by your demographics like age and occupation that has nothing to do (as the insurer sees it) with how risky of a driver you are but by actually using a device plugged into the car that measures how safe of a driver you are by tracking your every move. An interesting part about this trend was when Rob touched on what it would take for people to give up their privacy to big brother insurance companies. First, the company tried a point system, where safe driving behaviour is rewarded with points that can be redeemed for groceries for example. When this didn’t seem to convince drivers, they came up with another approach: the worst part about dealing with your insurance company is seeing your premiums increase. Many times when drivers get ticketed for speeding, they don’t think they did anything wrong and blames faulty equipment. Not only do they have to pay the speeding ticket, they would also see an increase to their monthly premiums — a frustrating situation to be in when you believe you did nothing wrong. Rob and his team identified this pain point and created a solution: if the data from your telematics device justifies that you weren’t speeding, then your insurance won’t increase. Just like that, drivers then felt they were getting a deal from trading in their privacy.
Insurance without insurance companies
To illustrate this third trend, Rob traced back to the origin of insurance. A couple hundred years ago, villagers lived together in tightly-knit communities. If everyone gives themselves to make the community a bet, then if someone’s house burns down one day, the entire community comes together to help the unfortunate one rebuild his house. The insurance industry was born out of this principle. Using money as the medium, insurance holders contribute monthly to a large community pool and get helped when they face a setback. However, the insurance industry as we know it today has taken all the humanity out of this social system. Try to feel the antagonism bubbling up when you hear industry words like compensation, claims, and premiums. Malpractice insurance for doctors has one of the highest premiums. Some doctors are getting together and “insuring” each other in the group. “Let’s promise that each of us won’t do anything stupid.. but in case a patient sues, we’re all going to chip in to help whomever is in need.” The insurance industry hasn’t changed much in my life time. So I’ve always taken it for granted and never questioned the way things are. It’s incredibly thrilling to hear an experience designer dissect this seemingly unmovable societal structure. That’s the power of design — helping you see the same thing anew and create mental space for change.