Insurance Innovates With Products That Fit Customers’ Lifestyles
Consumer expectations, driven by technology, social change and the pandemic, continue to evolve. Increasingly, customers expect convenience, an intuitive way to buy and a seamless journey, irrespective of the communication channels they use.
To meet these changing expectations, businesses need to innovate constantly. This is as true of insurance as it is of any other business sector.
Max Tiong, Head of Digital Transformation at Singapore-based composite insurance company NTUC Income, believes that the only way to innovate successfully is to take a customer-centric approach. “What kind of products can we create to embed ourselves within our customers’ lifestyles?” he asks “Could we become a Netflix for insurance? What can we learn from Apple Pay or Amazon Prime to help us capture the Gen Z market?”
The Generation Z market is an important one. Comprising around 2 billion people globally (more than one in four of the world’s population), it’s a huge opportunity for the insurance industry to focus on. Insurance is a lifetime investment, Tiong adds, and creating brand loyalty early (Gen Zs are under 25) can increase the lifetime value of insurance to a person by two to four times.
But this is an extremely demanding, tech-savvy demographic, and innovation is crucial for companies that want to succeed and grow alongside it.
Innovating the insurance market
Innovation means creating new experiences that create a competitive difference. But doing this is risky, and not all innovations succeed commercially. And the process of developing and testing new products and services is costly, whether or not they succeed.
However, when innovations do succeed, the payback can be huge.
Keeping the focus on customer experience is the most important way to reduce risk, Tiong says. “Whatever the product, improvement is always possible. There is always an experience that customers will be better attuned to.”
And this is true regardless of the customer segment. Constantly testing new ideas on different customer segments allows more relevant and desirable products to be developed.
But customer-centricity needs to go beyond the product. Organizations need to examine how different marketing channels work together to build a positive brand experience. And they need to focus on how the product is delivered to customers and how it will be used. Optimizing the end-to-end customer experience is essential.
The key to this is using data to build up a detailed understanding of an individual lifestyle, whether that of a parent, retiree, delivery driver or gigging musician. Data points from a customer’s lifestyle can inform us about their pain points, needs and preferences, and leveraging such insights for potential product and service innovations is a huge opportunity. For example, everyone has different insurance and financial planning requirements. But if we look at our society, which is increasingly becoming digital-first, customers generally display similarities; they often use smartphones and digital payments, and demand high levels of online service.
Lifestyle-inspired insurance
The lifestyles of different customer segments can underpin the development of many new ideas in the insurance industry, such as micro-policies and usage-based and subscription-based insurance. NTUC Income has used lifestyle data to develop several such innovative insurance business models.
One example is SNACK, a novel insurance proposition designed for digital-savvy consumers that offers protection via stackable micro-policies based on flexible micro-premiums. SNACK is built into people’s lifestyles, allowing consumers to build or stack insurance coverage linked to their daily activities, such as taking public transport, dining out or going for a jog, and pay as low a premium as S$0.30 when each lifestyle activity is completed. This is an attractive proposition for segments such as Gen Z and first-jobbers as they can easily get on board to plug their protection gaps without heavy financial commitments.
An extension of SNACK is SNACKUP; customers that transact with merchants that partner with SNACKUP get insurance coverage for free, contributed by the merchants. For example, when customers order food via one delivery service in Singapore, that company rewards them with a free $100 of insurance coverage, via the SNACK app. From the merchant’s perspective, offering customers insurance coverage is a refreshing way to reward customers for their loyalty, and for NTUC Income, it is a way to reimagine the way it extends insurance access to society. This insurance coverage can accumulate over time to provide substantial coverage to customers.
For drivers, NTUC Income has introduced “Milesurance”—pay-as-you-drive car insurance in which mileage is taken into consideration when ascertaining premiums, using telematics and data analysis. This usage-based insurance model resonates with customers who are increasingly looking to lower their carbon footprint by driving less and working more from home due to the pandemic, or those who are gig workers.
Another innovative solution is TRIBE, a flexible subscription-based insurance model in which customers pay a fixed small monthly fee for the insurance plan they select and have the flexibility to adjust as needed, depending on their life stage. For example, a mother can purchase a Child Pack that comes with two insurance plans—the Child Illness Plan, which covers infectious diseases, food poisoning and allergies, and the Child Injury Plan, which covers accidents and injuries—for S$5 a month. When the child is in a preschool nursery, the mother can increase the child’s coverage under the Child Illness Plan, as they may be more susceptible to infectious diseases. When the child starts school and is more active in sports, the mother can increase coverage under the Child Injury Plan, and reduce child illness coverage, all kept within the same budget of S$5 a month.
The future of insurance
One thing is certain about the insurance market: Change is here to stay. New technologies are emerging that will continue to promote innovation. Big Data analysis, artificial intelligence, blockchain—all these will be drivers of new lifestyles and also of new insurance products and services.
As consumer needs evolve, so must insurers evolve how they engage with customers—not just regarding product offerings, but also channels and touchpoints, online and offline, as well as the user experience.
By responding to constant change, insurance companies that put customer lifestyles and needs at the core of innovation will always be able to deliver products and services relevant to different customer segments, as well as experiences that delight them.
Click here for more: www.income.com.sg
一 Industry View from NTUC Income
This article originally appeared on Business Reporter. Image credits: iStock - 1250152532
