Personalization – a question of corporate culture and ethics
Over the past month we've held Shifting Gears breakfast sessions in Sydney, Auckland and Wellington. The sessions were aimed at sparking discussion around what we saw as one of the most important trends in our industry – personalization.
It’s easy to become deaf to the buzzwords that saturate the conversation around the future of life insurance, so with Shifting Gears we try and cut through the hype to see what is actually important. Sure it’s key to keep up to speed with blockchain, data and analytics advancements, and the validity of chatbots, but it’s often hard to see how they translate to the day to day workings of a life insurer.
The question is, where should insurers make investments today and what is it that we’re actually working towards. Personalization, it seems, is one of the most likely answers to both of those questions.
To start the discussion CEO of Montoux, Klaas Stijnen, talked about global trends and enablers of personalization. He highlighted some examples of how life insurance companies globally were translating it into their offerings.
Some of the key examples included:
AllLife is a South African based company disrupting the life insurance space with life coverage for those living with HIV and diabetes. Their insurtech model uses algorithmic pricing, robo-underwriting (an automated assessment of applicants), and a health-centered approach to treatment adherence driven by behavioral economics, to extend insurance to those with chronic diseases.
They’re a good example of how to win a relatively large niche with a well understood risk by personalizing the coverage and account management.
Ladder life is a relatively new California-based provider backed by some large reinsurers. They also boast things like a strong digital channel and data capabilities.
Perhaps the most interesting part of their offering though is the ability for customers to easily dialback or increase their coverage based on unfolding life events: “As your life unfolds, apply for more, or decrease without hassle.”
Haven life, a subsidy of massmutual is a good example of a larger insurer setting up a smaller, more nimble branch to experiment. And if it works, having the option of moving existing business over to the new model.
So what’s different about them? In the words of founder Yaron Ben-Zi: “We are the first place where you can buy a fully underwritten policy completely online. Customers can go to our web site and in 20 minutes see how much they need, apply for a policy online, get a decision and start coverage right away.”
Life.io is just one example of the tools being developed to enable life insurers to create a personalised customer journey, combining “product ideation, development and commercialization, through marketing, sales and in-force management”. While new, Life.io is partnering with the more established LIMRA, and their model will be an interesting one to watch.
We then brought it to the group for a discussion. We live-polled each room of life insurers anonymously (full disclosure, the rooms were slanted towards actuarial and product people) and discussed the results. This similarities and differences between the rooms were telling.
Our first question was what do you think has to change in the next 5 years in life insurance (in your country) to work towards personalization? There was a pretty clear consensus across the three centers for the most important, accessibility of data was voted to the top each time. There was quite a lot of variation for the next spots though. Take a look:
The second question we asked was one of ethics. When it comes to product, personalisation raises some important questions. The more personal we get, the smaller the risk pool and the higher the chance large groups of people can no longer afford life insurance. So with that in mind we asked how, in an ideal world, they would interpret a “fair” or “appropriate” premium for life insurance.
Unsurprisingly, most people fell somewhere in between pooled and personalized. The most interesting difference however, was the amount of Auckland based insurers who stood firmly by the fully pooled option.
Here are the results:
Understandably, some enlightening discussions followed.
It was widely agreed, and seems obvious to us, that personalization is starting to be an important issue. It could be the key differentiator for those looking to shake off the current stasis life insurance products seem to be under. The question remains though, for those looking to use personalization to boost growth, what will it look like? How will we navigate the data demands of personalization, while keeping ourselves on the right side of the ethical line?
We’ll explore these questions more in future articles. In the meantime, if you’re interested in being a part of future discussions, keep an eye on our event page and make sure you attend the next Shifting Gears session near you.
About the Author
Rachel Meikle has been working in the tech world since the beginning of her career, with a focus on digital marketing. She is currently Head of Marketing for life insurance pricing software provider Montoux, and Content Manager of Shifting Gears. Rachel has a keen interest in insurtech and maintains a constant finger on the pulse of tech trends in life insurance globally.