If you’ve ever played darts, you know how tough it can be to hit the bullseye. But imagine playing darts blindfolded. Most people would consider that foolhardy, and maybe a little dangerous!
Yet, as L&A and Group insurers face new market needs and attempt to hone their offerings appropriately, they may be tempted to launch new products and new services while they are blindfolded to both the market and the opportunities. Do they know that their product will hit its target? The question is especially relevant in an industry with declining ownership rates while at the same time there is a shift in demographics with Millennials and Gen Z who have different expectations. Could Digital Insurance 2.0 playbooks help life and annuity providers to see clearly and chart a new direction? This is the subject of our recent thought-leadership report, Digital Insurance 2.0 Playbooks for L&A and Group Insurers.
Can L&A and Group re-strategize and build a new model?
The L&A and Group industry has experienced a long period of limited innovation, as well as a decline in insurance ownership over the last 30+ years. Think about it: What were the last innovative ideas introduced into the industry before the digital age and the emergence of InsurTech? For products, it was universal life and variable universal life in the 80’s and critical illness and long-term care in the 90’s. For operations it was straight through processing, instant issue, and online portals for quoting and buying. For channels, it was direct with online term, bancassurance, and term comparison sites. While at the time we considered these “innovative,” the reality is that these examples are iterations within our traditional industry orthodoxies. As proof, none of these innovations have been strong enough to counter a troubling industry downturn. Why?
What changed in the marketplace was not the need for products, but the need for customer experience transformation that would match today’s consumer demographics and lifestyle patterns, fostered by digital approaches to purchasing and managing products and services. This could only happen through a Digital Insurance 2.0 transformation.
David L. Rogers argues in The Digital Transformation Playbook that pre-digital-era companies must rethink their game plans to capture opportunities in the digital age. He suggests that digital transformation is not about upgrading a business’ technology, like our modernization or optimization projects over the last decade, but rather about upgrading a business’ strategic thinking. He asserts that companies must rethink their traditional underlying assumptions in five domains of strategy: customers, competition, data, innovation, and value. He advocates utilizing customer networks, platforms, big data, rapid experimentation, and disruptive business models to do this.
To make this shift, insurers need a new playbook for Digital Insurance 2.0 based on a new business model. Developing a new business model will demand taking a much broader view by looking at the next generation of buyers, who are digital sophisticates, and will require a new core insurance business platform that leverages new technologies, data, ecosystems (and much more) to capture the opportunity. Those without playbooks and plays will find themselves scrambling from priority to priority instead of confidently transforming their platforms and executing their own strategies to earn the win.
For customers, what is the meaning of life (and annuities, group and voluntary benefits)?
As customers grapple with their futures, they are struggling to figure out how insurance fit into their personal puzzles. Traditional products may not make as much sense financially. They may not seem like a good value for the price. They may appear too broad and, in the short-term, wasteful. Low interest rates, new fiduciary standards and higher levels of investment in retirement products may drive many to think that life protection is unnecessary.
As we have shown in our consumer research, today’s target market lacks insurance understanding. Some insurers have done the hard work of simplifying life insurance messages and processes. For others, however, the sheer number of options within product portfolios is enough to make prospects’ eyes glaze over. And the complexity of the application process can be enough to stop potential buyers in their tracks. Digital Insurance 2.0, when done well, may help customers to re-connect to the real protective meaning of life and annuity products.
The rapid emergence of new technologies like wearables, advanced medical devices, and exploding data (among others) is reconstructing the insurance market into one that is focused on well-being and longevity, rather than illness and death. Using Majesco’s digital frameworks, an insurer can begin to match innovative technologies with current trends, purchase triggers and untapped opportunities.
Attributes to prime the innovation pipeline
A new generation of life insurance, group and voluntary benefits products (based on the increasing experience with digital activities and technologies) is emerging from Digital Insurance 2.0 companies. They are using data and digital technologies to create simpler, more customized and tailored offerings with greatly streamlined and simplified processes, directly attacking the key weaknesses of Insurance 1.0 offerings.
Our consumer and SMB research decomposed a range of these new offerings into 30 attributes covering 6 categories of the customer journey (Quote/Buy, Pricing, Manage, Context, Value-Added Services and Social) and assessed consumers’ and SMB owners’ likelihood of buying or using them. The results highlight strong interest and potential for building new insurance offerings based on these attributes, despite a clear generational digital divide.
As a part of developing its playbook, an insurer can look at these attributes and gauge consumer receptivity across generational lines. (See Fig. 1) You can also download our latest report to gain access to more of these statistics for other generations.
Creating the piece that fits into the new market puzzle
For insurers that wish to create Digital Insurance 2.0 playbooks themselves, Majesco examines the Digital Insurance 2.0 Product Framework against five dimensions based upon these trends. (See Fig. 2)
- Intent of an insurers products: Indemnification versus risk prevention, avoidance and reduction.
- Visibility and accessibility of insurance: A distinct, stand-alone product versus an “invisible” or embedded product within other products, services or an ecosystem.
- Breadth: Broad coverage of multiple risks or items vs. specific coverage of a risk, item or event.
- Permanency: Continuous coverage for a contractual period of time vs. variable, episodic periods based on demand or need.
Journey: Focus on customer journey, needs and expectations vs. the internal operational silos across product, function, service and organization.
Why are playbooks of vital importance to pre-launch product development?
Insurers are constantly seeking the bullseye. But to hit the bullseye, insurers need a well-rounded look at their products and methods for reaching the market. They need to see the target from all of the dimensions shown above, plus others we discuss in the report.
The business models and products that are able to find success in these areas will likely be those that truly transform insurance, moving from something that is sold to something customers want to buy. The Majesco frameworks for playbook development are highly practical. They are first steps an insurer can take to confirm or deny that a new product idea will fit customer needs and hit the market bullseye.
In our next blog, DIY Digital Playbooks for Life and Annuities, we’ll take a step-by-step approach to using Majesco frameworks to build L&A product playbooks. Then, we’ll look at a sample playbook for a recent market entrant into the life space. In the meantime, you can get a preview of Majesco’s framework methodology by downloading Digital Insurance 2.0: Playbooks for L&A and Group Insurers.