Over the past two years, there has been a rapidly accelerated emphasis on insurance technology, data and distribution. But are we as an industry spinning our wheels? I think the answer to that question is a big yes. Why? Because we haven’t asked the right questions and are not trying to solve for the right problem.
All of the major technology, big data and distribution initiatives out there have a few common origination points, namely, underwriting profitability and transactional efficiency. There is a ton of money and resource spent on this, then we charge distribution with leveraging them in existing channels and in line with current transactional norms. In other words, we are trying to apply technology solutions to distribution channels that are not motivated or prepared to accept them – we then scratch our heads and wonder why we are so far behind as an industry.
Asking the right questions:
To fully leverage our capabilities and move our industry forward, we fundamentally need to start asking different questions – we need to go at the problem from the customers’ perspective and then drive the solutions backward. This means having the courage to understand that a distribution infrastructure that is unwilling to change will have to be shelved in favor of distribution outlets that embrace change. Without that realization, there can be no progress. The only technology advancements that can take hold are the ones that support the traditional avenues and solidify the position of the stagnated channels. Until we understand this, we will never improve. Don’t believe me? Let’s look at the landscape:
Why are we being commoditized?
Insurers battle the commoditization of their product – yet distribution insists that the primary customer decision point is price, even though study after study shows that customers will pay a higher price when there is value and convenience provided. Because of this, the traditional distribution channels insist on building comparative quoting infrastructures and “get a quote now” facilities that escalate the commoditization.
What does value mean?
We insist on defining value in our own terms instead of on the customers’ terms. We continue to hear from insurers that they will not be the lowest price but that they provide significantly better coverage. That’s all fine and dandy, but the reality is that other insurers can mimic your offering in less time than it takes for you to educate your distribution, and then get them to start selling the product. In other words, your competitive advantage is hijacked before it ever gets to market. We fail to recognize that DISTRIBUTION ADOPTION TAKES LONGER THAN CUSTOMER ADOPTION. That has been OK for a lot of years because everyone has been looking at things the same way, but what happens when your competitors wake up and finally “get it”?
What does the customer want?
Isn’t it fascinating that this is what is at the bottom of the list? Ok let’s dig in…
Customers want a process that is not PAINFUL.
Customers want to feel like they are buying the right thing from the right company and feel good about the transaction.
Customers want more than just a promise to pay.
Customers want to get their questions answered quickly and clearly.
Customers want to communicate in a way that works best for them.
It’s important to ask the right questions so you can solve for the right problem. In our next installment, we’ll look at each of these and how distribution breaks down.