Why is bringing in simplification and transparency into life insurance business operations so essential to being future ready?
After all, the global life insurance business is starting to show some post-financial crisis signs of recovery. However, life sales in North America continue to be alarmingly sluggish. The North American life insurance market itself isnt growing much beyond 2 percent, according to Swiss Re. Several factors, including ongoing concerns about the state of the economy, as well as demographic changes and new competition, are contributing to these relatively flat sales.
But theres another issue contributing to the problem: complexity. Life insurance products have historically been very complex, combining savings, protection, and investment. This is at odds with todays customer expectations of clarity and simplicity.
Your customers are changing in terms of their behaviors and expectations. They demand transparency when theyre buying anything including life insurance. This makes it essential for you to look from the outside-in to make sure you are providing an experience aligned with what your consumers are looking for.
Yet, while the answer seems simple, implementing it is difficult for several reasons. Macro demographics have changed, and we now have four generations of active customers. Clients are more demanding, so you need to stay focused on the personalization agenda. For instance, some prefer to contact their insurer by phone, while others prefer the Web, in person or by mobile or a combination. Customers today expect information faster and quicker and will not hesitate to drop an insurer and move to another organization if they dont receive great service or exceptional personalization. In short, it is essential for you to meet this need – because now, more than ever, speed and accuracy may just equate to earning the business.
And while consumer expectations continue to grow, you still have a demanding and challenging list of priorities to fulfill:
- Addressing business growth by leveraging new products and emerging channels, segments and markets
- Attracting and retaining customers
- Containing costs and driving profitability
- Mitigating risk and ensuring regulatory compliance
While these arent new considerations, they add additional complexity to a business thats already grappling with the advance of multi-channel and the need to be faster and more accurate.
So what can you do to drive growth and address this more complex environment?
The answer is to simplify and provide greater transparency. Here are some ways to get there:
- Get a handle on your business model and direction
Then, look at a typical change or transition model for getting from where you are to where you need to be. The route will be different for every company and will depend on your organizations individual strategy. For example, if your company is primarily agent-driven, you may want to focus on productivity, and can consider adding agents, creating training programs, and automation to increase sales and make agents more effective.
- Transform and simplify your legacy environment
Flexibility, agility, and the ability to personalize will continue to be critical. Legacy environments no longer meet customers’ needs. Every insurer must have the data and analytics to be able to create the right products with the right level of personalization for each customer. This has to work regardless of the underlying platform and for all combinations of ways in which customers like to engage. You must have that back-office capability to deal with this 24/7 and deal with it in a personalized way.
- Simplify products
It used to be that life insurance in particular was complicated and hard to understand. But that has changed, with new, simpler, non-traditional products slicing the market share from life insurance. Consumers are becoming more differentiated – they want to choose among different options, with factors other than price driving the decision. If the product is not intuitive and clear, they dont buy it. Carriers that fail to simplify may be at risk of falling behind competition.
- Create an ecosystem
Insurers can build an ecosystem by partnering with complementary organizations. In the same way that auto dealers sell insurance with cars, life insurance can be bundled with life-changing events such as weddings or the birth of a child. Insurers could partner with retailers, resorts, caterers, and several diverse players to create awareness of these new needs for insurance.
Insurance organizations are approaching solutions in many ways. Some have been investing in these areas for a substantial amount of time, have identified opportunities, and have clear direction in moving toward their goals. Some are looking to change their legacy environment and harness brand new capabilities to address these drivers. Others are considering point solutions. While technology can be a powerful enabler, there isnt any one solution that will act as a silver bullet to address the problem of life insurance growth.
Regardless of the method used, to revive growth in the life segment, its essential for insurers to simplify. Are you ready to embrace simplification and do you know how you will achieve it?