How Insurance Can Win Love and Escape Irrelevance

DVDs. Disposable cameras. The dominion of taxis. Life was good for them about 10 years ago. Now, they’re a cautionary tale. Transform products and services—if you can—or face disruption or extinction.

“Transformation,” not “adaptation,” is the key word here. Uber transformed ride hailing. Taxis adapted by scrambling to make their own apps. Adaption is a half-measure—a flashy appendage tacked on to a legacy product or service. Transformation, by contrast, is akin to rebirth. True digital nativity.

That’s what insurance needs to do.

Using insurance is emotional—buying it is not. We often buy it because we have no choice. We don’t really want it, and once we have it, we never want to need it. And we want to pay for as little of it as possible—until we need it, when we wish we had more of it. The sale of insurance is governed by complex mathematical models and hypotheticals. How to transform all those things into a simple, breezy experience?

One way is to not only focus on improving the purchase and claims experience, but also create value across the vast swaths of time that customers hold a policy. Look beyond the pain points to the tension points, or even the neutral points.

And above all, the industry must transform the experience—not simply adapt by integrating a few tactical user experience improvements. Digital drives transformation, but “digital” can mean a lot of things. What matters most are transformation “enablers”—the digital tools and processes that cut deep into the core of the experience, rather than those that make superficial improvements.

Here are a few the insurance industry needs to embrace:

Voice and natural language processing. Think chat-based platforms like Facebook messenger and voice assistants like Amazon’s Alexa. The idea here is to make the buying and claims experience easier, effortless and more conversational. The biggest challenge is developing a clear brand personality that translates across ad, site, app, social, chat and voice experiences.

Connected cars and usage-based insurance. In auto insurance, this means gathering driver data, from cookies to telematics, to get to know drivers, and talking to them like real people. Private information, of course, should buy premium benefits—and deep personalization. Policies and pricing should depend on the driver’s actual behavior, with rewards for low-risk driving and personalized safety incentives.

Artificial intelligence (AI) and machine learning. Marriage, kids, downsizing, budgets, new toys—people change. Insurance should be as flexible as the rest of life. Using individual data, AI and conversational experiences to help policyholders change and adjust their insurance proactively, or in the moment, is another way insurance providers can really act human.

Rich media and location tagging for speed and accuracy. Accidents and disasters can happen anywhere. Using live video, photos and geotagging could eliminate one of the most tedious and tension-filled aspects of filing a claim: documenting the event after the fact. Instead of trying to remember what happened and writing it out in a form, customers could just take pictures, pin locations and record a live testimonial.

Peer-to-peer (P2P) payments. The concept is as old as the hills, but digital can reinvigorate it. Now that transactions rely less on institutional infrastructure to be tracked, exchanged and verified, insurance models that look like old farmers’ cooperatives could make a comeback—and totally reinvent the customer/provider relationship.

Scott King is strategy director at Critical Mass.