Our industry was built to create stability in the times and events of life where instability can make life difficult. If you lose your home to fire, your insurance company is your stability. If you lose your life or become disabled, your family will gain some stability from your future planning with an insurance company.
But where is the insurance for insurers? When the insurance industry is facing periods of instability, our stability and our "insurance" must be in innovation and transformation. To continue to offer stability, insurers must be willing to take a little risk and go into the places where individuals and companies are at risk. We must create value and stability when needed, connect with customers in the ways they are used to being connected to.
The year 2020 will disappear in history as a year that felt unstable. When we look back in history, but in the event of major crises and catastrophic events, such as the increase in COVID-1
Insurance is part of this technological innovation. COVID-19, among other cultural, demographic and global pressures, will make insurance better and more relevant through the innovative application of technology – and we must not only see it happen, we must make it happen.  In my next two blogs we will cover some important foundation. Today we will look at the trends that emerge from COVID-19, including faster ecosystem development. Next week we will look at some real and insightful case studies about organizations that have chosen to build ecosystems and how they see success.
COVID-19 does not occur in a vacuum. It applies its pressure in the ongoing context of demographic and behavioral pressures that drive innovation. We look at the role that ecosystems will play in responding to these pressures and then we use the Fogg Behavior model to explain why customers engage in ecosystems. We end with a discussion about insurance companies that choose a role to play in the future of insurance.
People are still at the root of change in insurance
With COVID-19 we found ourselves quickly creating "new standards" Even if they are temporary. Students and instructors meet in virtual classrooms. Restaurants expand online ordering, outdoor seating, delivery options and service on the streets. Grocery stores also receive deliveries. Doctors make virtual home calls, with telehealth replacing face to face. After this COVID phase has passed, a "new" normal will replace our previous normal and THE normal will not include traditional insurance that we once knew about.
Over the past five years, we have tracked three macro trends: people technology and market boundaries but the most important that really fundamentally changes our industry and changing companies in all industries are people .We have examined customer demographics, customer behaviors and psychology. r examined the new and different types of needs and risks because their behaviors are very different from what they were 20-30 years ago.
Everything we discuss and every way we change must fundamentally consider a customer-oriented perspective within current insurance pressures. There is a new competition. We have different types of channels and InsurTech. We have lots of maturation technology and the explosive data growth. All of these side considerations will only go into how we engage and interact with our customers in the future and how we provide the types of products and services they want, need and expect.
Let's look at it from a generation perspective: Millennials, within a year, will take over Gen X and Boomers as the dominant "sweet spot" insurance segment – people in their 30s and 60s. We've been talking about this for several years and it's here now — but are you ready?
Since the next five years, Gen Z joins them and by this time it will be a complete reversal in the dominance of demographics in our buying marketplace. The generational shift of buyers is really important because the Millennial generation grew up digitally, but the Gen Z individual was "born digital." Just look at kids under 8 who intuitively knew at 1 or 2 how to swipe a smart phone or could order something from Amazon – like my 3-year-old grandson did!
If they see value in something, they will not only buy it … not only will they buy it online … but if they perceive it to be of value, they are willing to share their data to get it . THIS IS A HUGE SHIFT, BEGINNING FOR A BIG CHANGE IN INSURANCE.
The pandemic has really increased the understanding of it in the market, especially for the younger generation.
COVID pressure increases the need for change
According to the NAIC, it was an increase in life insurance purchases (79% increase) that came out of the Spanish flu back in 1919. The same thing, perhaps not on the same scale, is likely to happen. individual life insurance, and also with employee voluntary benefits. There is an expected increase in the demand for life insurance as a voluntary benefit and insurers will also create new types of products that will help under a remote control. It is a group / voluntary force that we can count on within this channel.
In March, Forbes had an article stating that since January 2020, when the first indications of the pandemic were on the way, online life insurance sales increased 30-50% for companies with "fast apps." This would be an online excitement due to digital accessibility linked to the online marketing channel. At the same time, interest in car insurance with payment as you drive increased, reflecting our "on-site protection" focus.
Remove the statistics and we still have the anecdotal evidence that the insurance's purchase and damage processes must enable customers to achieve their goals easily and contactlessly if possible. Insurance companies, agents and brokers must have their tools upgraded to enable the "doctor-like" telehealth model – only in this case it is the "tele-insurance" model. There is a theme that goes through each print point including the pandemic – online and digital versus bricks and mortar . We saw the bookstores disappear when Amazon came. We saw taxis losing business when Uber arrived. Those who survived offered a multi-channel model of digital and traditional. If we do not see interactive face-to-face diminishing now that virtual technologies are here, we are blindly entering the future.
Agents will still be important. They need as much as anyone a digital / virtual perspective where they can work in several different channels depending on what they do at the time, what they have access to and what type of product and customer they work with. . Agents, perhaps more than anyone else, will benefit from real-time data, dynamic pricing, lightning-fast underwriting and engagement that fits into the palm of their hand. COVID gave us a mandate to make the customer experience really flexible and simple. What will it take for us to grab the baton and run with it?
The ecosystem is the basis for the enhanced experience
Every once in a while you have to stop and redefine a popular term, as an ecosystem, in light of its industrial use. It can be thrown away until it loses meaning or it becomes what someone wants it to mean. In the case of business ecosystems, the actual importance has grown as the ecosystems themselves have grown and added new capacities and new opportunities.
Today's meaning is something like "a collection of technologies, data and partners that are brought together to extend the reach of a product or service, facilitate data, create compelling customer experiences and unite common goals behind a common platform." Even this definition may be tight, but for now we should consider how ecosystems fit the insurance of the future and the future of the customer experience.
People are looking for ways to make their lives easier Apps are useful, but we are now overloaded with single-function apps and apps that are not completely The next generation of customer experience is bigger and broader and it requires an ecosystem of relationships and a different set of technologies that work together under a common platform.Companies must choose their roles in the development of these ecosystems.We will talk more about this in my next blog, but currently believes that insurance companies have choices about whether they will simply be delivering products players in an ecosystem that develops outside themselves or if they want to have a customer relationship and set the standard for an ecosystem where they act as the core.
Either way, both paths recognize that we can not do everything within our four walls and we must find other types of partners and relationships that help us deliver the types of operating models and experiences and products that customers want. The ecosystem will be at the center.
The Fogg model and why customers work with ecosystems
About 18 months ago, Majesco Consumer and SME research focused on customer behavior and reasons why people and companies may or may not want to buy insurance.
The basis for the research is a customer psychology model called the Fogg Behavior Model. The Fogg Behavior model has been adopted by several InsurTech startups who have used it to think about how to offer insurance and collaborate with customers in the market.
There are three factors in the Fogg Behavior model:
- Motivation – Why should customers want to buy?
- Ability – Is it easy to buy?
- Asks – Is there a compelling reason or trigger to buy right now?
When you take these three factors into account, the business model will change to meet customer engagement needs. Can we place an insurance on the quick question? This may involve embedding insurance in a current process, such as Tesla, embedding insurance in the purchase of a vehicle. Can we make it available "on request", for example when a person realizes that their property or family is open to additional risks? There is a huge shift in the younger generation; those who become the primary buyers of insurance. They will look for ways to buy insurance at the fast lane, when they are motivated and when they realize that the process is easy.
In order to synchronize these three factors, an ecosystem method is required. Real-time insurance data and form filling can come from one company, while real-time telemetric data can come from another. Another company can provide value-added services to round out an offer, while a core company, such as Majesco, can provide the platform to bring everything together on the cloud.
The reason why the ecosystem is even more important for customer engagement is because the streamlined digital experience is the normal expectation for today's customer, who has traded with Amazon, Apple, Google and Uber. Many insurance companies are unprepared for that level of expectation and yet Gen Z will come to their primary buyer in 4 to 5 years.
Next week we will take a close look at real ecosystems that are having real success. We examine the obstacles they encountered and how they deal with them. We will also look at which ecosystems represent a threat to competition and which ecosystems contain elements that can be translated into the insurance customer experience. I hope you will join me. In the meantime, you can find out more in the Majesco White Paper, "Insurance Digital Transformation: A New Era of Core Systems, Next Gen Technologies and Ecosystems."