This Opinion piece is by Assaf Henkin, Co-founder, COO & President, Sproutt, and it looks at the more personalised, data driven and holistic approach that Life insurers can take in today’s online market.
It’s hard to build a business reputation around something nobody wants to need – such is the insurance industry’s longstanding conundrum. While nearly every industry relishes the opportunity to engage with customers, insurers have traditionally been more wary. If customers are already skittish when it comes to insurance, engaging with them could lead them to cancel or switch policies. When done right, engagement can be an important advantage in an era of customer experience and expectations.
To minimize their footprint on customers’ everyday lives, insurers have long stuck to an impersonal, standardized model when underwriting policies for clients. But by taking a one-and-done assessment based solely on broad characteristics, life insurers are doing a grave disservice to their customer base.
At a time when consumer expectations are calling for greater personalization in everything from groceries to healthcare to banking, insurers must recognize that people are more than a checklist of basic “stats”: each individual is defined by a myriad of interests, choices, habits, and more – which insurers can account for by taking a more holistic approach to evaluating applicant policies and finding creative ways to acquire the data to build those policies.
Here’s “how and why” insurers should shift their policies (pun intended) as they look towards the future of the industry.
Avoid yesterday’s tunnel vision
For years, the industry standard for determining policy eligibility was to measure a select few parameters for each potential policyholder. These included BMI, age, smoking status, and… little else. At best, this list neglects the nuances that define us. At worst, they could be downright misleading – as in the case of BMI (now considered outdated and inaccurate for determining overall health), which might flag for obesity without accounting for variations in muscle mass or body fat distribution.
Basic factors like age or cigarette consumption should of course still be considered when vetting any client, new or old. But a holistic look at policymaking demands an expansion of these basic checkboxes, adding “lifestyle ingredients” that more accurately characterize any given person – i.e., physical activity, sleep habits, self-care, diet, hobbies, and more.
By adopting a rounded approach towards collecting data that truly defines each customer, insurers will gain a fuller picture of any given person’s risk and can thereby best determine eligibility.
How to collect this data?
How does one go about introducing so many new data points to longstanding insurance processes?
Couldn’t it hurt insurers’ bottom lines to spend the time and energy needed to collect, define, and compile all this data regarding their customers?
These are fair questions.
Yes, collecting the data needed to facilitate a holistic insurance experience does take time and resources. But it’s hard to dismiss the value that personalization has been shown to drive. Insurance customers today want personalization, and it’s up to insurers to oblige, making this type of data collection a must.
When it comes to actually gathering this data, gamification – more specifically, gamified data collection – is a good place to start. Most modern consumers already engage with numerous gamified mobile apps and digital platforms every day – often ones that require or yield data such as health trackers, food and product delivery apps, mobile banking, games, and entertainment. The insurance industry can certainly learn from the numerous other gamified processes that have grabbed customers’ attention.
Platforms in the insurance realm dedicated specifically to gamified data-gathering are still in the research stage. But once perfected and cleared for compliance, gamified data collection through mobile apps and the like will be an invaluable member of the modern insurer’s tool kit.
The added benefits of gamified health-tracking
Gamification can also help insurers overcome another limit to traditional underwriting – the fact that a single pre-purchase survey can’t account for lifestyle or health changes over time. By driving up long-term engagement with data-collecting platforms, an ongoing gamification engagement process, which generates customer interaction on a regular basis, can alert insurers to their lifestyle changes in real time, allowing them to adjust policies and offer better rates for healthier long-term choices. In addition, with this ongoing feedback loop in place, policyholders will be less likely to feel that their policy is static or no longer suits them, thus reducing their desire to switch policies or seek a different provider altogether. Not to mention, clients will be incentivized to embrace as healthy a lifestyle as possible – a win-win for insurer and consumer alike.
Beyond personalization, gamification is also an excellent way to drive customer engagement and has been shown to increase per-customer profitability across the enterprise space.
Life insurance is dead – Long live life insurance!
As life insurance takes on a new life in our digital age, insurers must strive to broaden their horizons when it comes to underwriting. In this age of big data, new parameters need to be incorporated into their evaluation models that will paint a more holistic, accurate picture of any given customer.