Insurance is the New Black

Insurance is cool. Yeah, I said it. Three words that I never thought I would ever string together have suddenly joined up in my battle cry. Insurance will be the next industry to deliver a major shift in customer perceptions — changing from a focus of pain points, to one of passion points.

I’ve been a lifelong insurance customer, yet I can count very few magical consumer moments with insurance products. Direct billing for health care maybe the greatest consumer-centric innovation to come to the industry, however, I suspect it was first designed for primacy care providers in mind, rather than the customers.

I was reimbursed in full when my digital camera and laptop were stolen from my car during my college move-out. However, my insurance carrier later dropped my mother’s home policy because of the claim. Needless to say, this hardly a magical moment or a passion point.

Yet, several ingredients are finally folding together to motivate a consumer-centric industry shift from within, as well as opportunistic outsiders with a knack for “not taking no for an answer.” I myself, fall in the latter camp. I entered the insurance industry in early 2016 with a mission to first observe and investigate unmet needs, underserved segments and emerging trends; then hypothesize on opportunities for growth and disruption for my company and the industry; and, finally, building the capabilities, assets and relationships to execute.

What I found, and now what I am motivated by, is both exhilarating, scary and mind-boggling.

The insurance innovation mojo

The insurance industry is a $5 trillion-dollar market globally. That is trillion with a T. Regardless of geography, it is also largely dominated by gigantic decades- and centuries-old incumbents with firm channels of distribution, legacy IT infrastructure, ‘ways of doing business’, management hierarchy, long value chains, deep pockets of capital and regulatory oversight. These factors all build up a five-star recipe for the ‘innovators dilemma’ — coined by Clayton Christensen — when a novel idea manifests that could fundamentally change the insurance landscape. Anyone reading this article and not familiar with the concept, go to Amazon and by the e-book now, then thank me later.

Many entrepreneurs and industry players have taken wind to the above notion. They want to seize massive economic opportunity despite significant barriers to entry. With the insurtech explosion, they are creating new business models (episodic, on-demand), channels of distribution (intended, opportunistic, incidental), and product offerings (telematics, single-item, cyber). The latter of which is where insurance gets really interesting.

Finding the magic

The gap between customer needs and product features/experience will be a major focus in the next few years, especially as customer behaviors and expectations rapidly evolve. Lean start-up methodology lends well here as build, test, measure, learn and repeat allow motivated players to discover and capture new market opportunities. ZhongAn Insurance in China is handsdown the standard bearer of the movement toward customer centricity in insurance.

Alibaba-backed ZhongAn can take an insurance product from concept to market in 6 weeks. Typically, an incumbent process takes 6 months when expedited at insurance light speed. Granted, ZhongAn has some idiosyncratic advantages that I won’t cover here. But ZhongAn’s pace of product innovation and rapid prototyping will hit on something magical that consumers will embrace with passion and vote for with their policy holdings. ZhongAn will never cease to fascinate me and I will cover the company more in subsequent posts.

Nevertheless, I firmly believe that insurance will move back into more creative, user needs-driven innovation. We will soon discover magical moments that surprise and delight consumers by extending ourselves above and beyond expectations.

The path forward

Insurance professionals are not ignorant. We recognize technology and consumer forces are driving the industry toward major change. Most likely, innovation will happen on the periphery, where niche needs are overlooked by traditional lines of business. This area, the ‘emerging risk’ business, will be a growth engine for the brave insurers willing to support start-ups or behave like a start-up, and new players that can overcome significant barriers to entry such as capital requirements and regulatory licenses.

Insurance has been around for over 300 years (it’s cute how many insurers like to boast of their legacy and longevity). Many incumbents take significant pride in the notion that ‘insurance is sold, not bought.’ I firmly believe this model will quickly change, along with the notion that customers only engage insurers once a year at most. Even very simple value added services can dramatically alter the relationship insurers have with their customers (e.g. could customers with annual travel insurance plans be eligible for travel concierge services?). Channels will certainly expand, evolve, digitize and emerge; consumer expectations of how, what, when and why to be insured will change nearly in lockstep.

What’s next

The scope of opportunity cuts across insurance silos (life, health, property & casualty, personal accident, etc). This has lit a fire under me that I never imagined would happen before. I have a series of upcoming articles, where I will dig deeper in to the topics I presented above and more. I will also demonstrate why truly innovative companies change the way people feel about insurance.

Insurance is the new black, trust me. It’s cooler than the other side of the pillow*. Stay tuned for more!

*Credit Stuart Scott, may he rest in peace.

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