The Discomfort of Disruption: How Insurance Consumers Are Driving Change

March 03, 2016 by Anne-Frances Hutchinson

We’re in a moment in time when immediacy, simplicity and connection – real or perceived – are the drivers in our digital lives. In a mere handful of years, we’ve come to expect all of the transactions we make to be as convenient as online shopping or as easy as using social media. For the global insurance industry, that expectation is a critical fulcrum for change. 

The bedrock is shifting from product-centric to customer-centric, making insurance consumers the industry’s biggest disruptors. “Customers no longer want to go meet with brokers and they no longer want generic products. What they want is a tailored experience and product offerings that reflect a deep understanding of their needs and risks,” posits Bought by Many CEO Steven Mendel.

While regulatory compliance is the axis on which the industry spins, the impact of changes in distribution channels, shifts in competition and rapidly evolving customer behaviors are being felt profoundly at C-level. Those feelings aren’t necessarily comfortable; seventy percent of insurance CEOs who participated in the 2015 PricewaterhouseCoopers CEO Survey regard the speed of technological advancement and changing consumer behaviors as threats to growth.

That sense of discomfort is felt deeply in larger companies with cumbersome legacy systems, deep silos and aging IT infrastructures that limit their agility, slowing their response to market demands. Translating complex products into straightforward, accessible concepts can be costly for organizations of any size. And dealing with regulations can leave some firms with little bandwidth for of innovation, even though their leaders may recognize the urgent need for it.

Several household name P&C, life and health insurance companies are turning disruptions into bottom-line boosts, and you know their stories well. They’ve embraced big data, digital process optimization and telematics, among other advances, and focus on creating value and brand loyalty by developing and implementing great user experiences.

According to Bain & Co., “customers who are loyal promoters of their insurers stay longer, buy more, recommend the company to friends and colleagues and usually cost less to serve—with the mix of these forces dependent on the particular market and type of insurance.”

Why, then, do so many insurers seem frozen on the edge of the chasm, waiting for a push -- or for nimble startups with fresh ideas to chisel away at their client base?

“Many firms spend an inordinate amount of time simply defending against potential disruptors rather than using their energy to create value for their customers by being disruptors themselves,” observes Louis Régimbal of KPMG Canada.

The answers aren’t anywhere as instantaneous, convenient or transparent as the results that customers are demanding from insurers. But John Geyer, senior vice president of Met Life’s Innovation Program, offers this perspective on taking the leap fully into the digital age: “Our leadership has their eyes wide open about what is at stake here. But we firmly believe that if somebody’s going to disrupt our industry, it may as well be us.”


A New World of Opportunity: The insurance innovation imperative (KPMG) | 2015 PricewaterhouseCoopers CEO Survey (PwC) | Insurance 2020 & Beyond: Necessity is the mother of reinvention (PwC) | Global Digital Insurance Benchmarking Report 2015 (BAIN & CO.)

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