Insurance must rethink its role as the “traditional hypothesis” is no longer sufficient – the survey

Consumers look to insurance companies to address the world’s biggest challenges, such as climate change, population aging, and healthcare gaps. They also desperately want to reduce risk in their lives, according to the Bain and Company survey.

A majority (80%) of consumers said they want insurers to include environmental, social and corporate governance (ESG) initiatives in their offerings. More than half (59%) want healthy life insurance companies to reward them.

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

Only 4.3% in the US said they took services from their insurance companies, while the numbers were bleak in Singapore (4.1%), Switzerland (2.7%), Japan (2.5%) and the UK (2.1%).

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

“Consumers need more. the [traditional premise where] Tanya Britel (pictured above), executive vice president at Bain & Company, told the Insurtech Insights Europe conference in London earlier this month that insurance only provides capital to cover losses that don’t satisfy her anymore.

Disruption and uncertainty are accelerating consumer shifts

Consumer interest in environmental conservation and corporate governance has risen due to extreme turmoil and uncertainty in recent years, according to a Bain & Company report.

“Extreme weather events, disease and the COVID-19 pandemic, population aging, and technological disruptions are combining to radically change the risk landscape, with more risks and different types of risks,” the report said.

The confluence of all these factors has created an identity crisis for insurers as they face growing demand for what Bain and Company calls “functional elements” of their value proposition.

Reducing risk, providing ease and convenience, and paying claims are just a few of the core offerings that consumers expect their insurance companies to provide. But companies must rapidly evolve to deliver better social impact, life-changing value, and emotion to remain relevant.

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

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

Why not contact risk prevention services from insurance companies?

According to a Bain and Company report, risk reduction and prevention is the new frontier for insurance companies. But if consumers want to be proactive about reducing their risks, why shouldn’t they be catered for by their insurance companies?

This may be because many risk prevention offerings center around the insurance policy, not the customer, Brittle said.

One case study demonstrated the power of an insurance service that maintains focus on customer needs. Life and health insurer AIA’s Vitality app saw more than 300,000 sign-ups in the first year it launched. Catering to young families in Thailand, the app offers wellness information, trackers for family events and vaccinations, and online parenting forums.

“They started with the customers, not with thinking of ways to get their products out into the world. They picked a segment with unmet needs and designed their offerings around it,” Brittle said.

From the ‘push’ to ‘pull’ distribution model

As insurance companies redefine their role and value in the marketplace, agents and brokers play a key role.

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 meet customer needs and priorities).

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

“In many markets, the traditional sales force plays a very important role, not only to drive adoption, but also to create more sales and convert from online to offline,” Britel said.

Redefining the role of insurance

The transition to risk prevention and purpose driven business will take time for most organizations. Prittle warned that leaders should not expect immediate profit from this pivot. But, she stressed, the long-term result is worth it.

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

“This is about customers. This is about redefining the value you provide to customers. The customer’s desire must be at the forefront.”

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

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