By Annette King & Jenny Sutton
In the past few years, most life insurers have taken note of the business benefits that can be derived from being more client-centric – according to Deloitte, client-centred organisations have 60% higher profitability than those who are not.
In 2015, nine out of 10 CEOs said they were strengthening client engagement programmes and 63% said rallying their organisation around clients was in their top three investment priorities.
Unfortunately, many insurers’ efforts are self-servingly focused on simply trying to sell more to existing clients or digitising existing processes, rather than on redesigning the entire business around the client and their interests.
Culture
A client-centric organisation will prioritise and test every internal endeavour against a single, simple standard – is this what is best for the client? To do this requires a fundamental change in culture to one where all people within the organisation relentlessly ask questions about what the client needs, wants and is willing to pay for.
The client experience, which is what the client sees when they interact with the insurer, whether digitally or in person, is just the tip of the client centricity iceberg – to deliver a good experience to the client, the entire organisation’s activities also have to be oriented towards the client’s interests. That encompasses strategy, research, design, sales, service, analytics, measurement, performance systems and governance.
Who is the client?
The challenge is that not many insurers truly understand their target clients and their needs, and therefore understand how to deliver to the best interests of their clients.
Before the needs and wants can be determined, succinct clarity about which clients are being served is required. Companies cannot be all things to all people. This strategic decision, influenced by economic, demographic and financial considerations, is too often missed on the client centricity journey.
Things are improving, but many insurers still target “anyone who will buy” or they leave it to the intermediary to find clients – this usually signifies that strategic client segments have not been determined, and that the whole organisation is not aligned to reach and serve them.
Only when the client segment is clear, can the rest of the questions be answered – what do they need/want? What are they willing to pay for? How to best reach them? What channels are appropriate? What products serve them best? How to provide ongoing service to them? What would delight them? Of course in this technology age, it is possible to identify and reach a segment of just one person – complete personalisation. But for many organisations, identifying clear target client segment groups would be a very good start.
For each target segment, personas help to depict the client, characterising them in terms of their lives, behaviours, preferences as well as their financial, demographic and social situations. Digital analytics can turn the vast range of data available to insurers into insights to inform key design and delivery decisions.
Getting reacquainted with the client
Insurers have long held the paternalistic view that they know what clients need better than clients do themselves. The insurance mantra, “sold not bought” epitomises this.
Even if it was once true that insurers knew what clients needed, clients’ needs have changed rapidly over the last few decades, and our industry has struggled to respond at the same pace.
Fewer children later in life, less secure jobs, changing aspirations, and the instant gratification of mobile connectivity have dramatically changed clients’ lives, priorities, financial needs and experience expectations.
Yet insurance products and sales/servicing approaches have hardly changed. Products and contracts are still complicated, predicated on 10-40 year commitments, filled with industry jargon; self-service is difficult and yet personal service in many organisations is still only available during office hours; transactions are paper-intensive, time-consuming; and there are significant trust issues with the industry.
Client expectations are not set by “leading insurers”, or banks … Amazon, Alibaba, WeChat, Uber and Airbnb have raised the bar to new expectation levels. The slowness of insurers to adopt tech-enabled purchase and servicing models is an example, but the issue is deeper and broader spanning culture, measurement systems, products, distribution, technology and skillsets.
Insurers still lack the capability to meet clients’ needs at the base of the Client Experience Pyramid (see Figure 1), let alone to move up the pyramid to making interactions easier or even delightful for the client.
Investment in research into clients’ needs
Insurers need to update their knowledge of their current and prospective clients. They must invest in ethnographic research into clients’ needs and utilise all the digital data available to them, instead of relying on gut feelings or agents’ anecdotes.
Market research should not be limited to the last minute testing of a new product before launch, or tweaking the messaging around a new brand. It has to be comprehensive, rigorous and bottom up. It should include literally following people around as they go about their daily routines to understand the target clients’ lives, priorities and needs, and how insurance can be seamlessly integrated into their lives.
Fast-moving consumer goods retailers and technology companies are good at this. Insurers are not. Budget realignment to support this fundamental research may not be not easy, but it is absolutely necessary to invest in this foundation block.
A difficult trade-off
Because life insurance in Asia is largely sold through intermediaries, and the client is first registered by the insurer only when an application is submitted, insurers have an incomplete or distorted view of their client base from the outset. They do not see all the potential clients that considered their products, but who, in the end, did not make a purchase. They are not able to improve their client acquisition process because so much of the client interaction at the early stage of the journey is obscured by dealing with the intermediary.
Insurers need to do much more to understand what happens in the research, sales and servicing processes – they cannot simply rely on magic happening between the client and the agent/banker/broker.
While intermediaries are a key part of the engagement with the client, they should not be the only touchpoint – which means that insurers need to manage the overall client experience. That presents a challenging trade-off. The agent/banker/broker is an important stakeholder, as are employees. But at the centre of the business are the clients. They pay everyone in the value chain in exchange for having a problem solved or a need met.
It is a difficult shift to move the centre of gravity from the intermediary to the client. But as value chains are changing with technology, disruptors and new eco-systems, insurers have no choice. Insurers who understand their clients best and who build or partner to meet their clients’ changing needs will win.
Conclusion
Insurers must acknowledge that they have lost touch with their clients’ needs and preferences and recognise that, before they can become more client-centric, they have to reacquaint themselves with their clients.
What they find out may surprise them.
Originally Published in Asia Insurance Review 1 Dec 2016
