A succession of consumer surveys carried out by Accenture in recent years paint a somber picture of how life insurance products are perceived:

  • Seventy-five percent of consumers surveyed believe there is no significant difference in the products offered by insurance companies.
  • While the vast majority recognize the need to save for their retirement, only 45 percent would include a conventional retirement investment product and 29 percent a life insurance product among their top three investment choices. The preferred option, at 64 percent, is a bank savings account.
  • While insurers are seen to offer a wide range of products, they score poorly when it comes to having “simple, understandable” products and are not expected to generate the best investment returns.

As more and more vendors compete with traditional insurers by offering a variety of financial services, carriers can no longer assume their time-tested products will prevail. I mentioned in my previous post how important it is that insurers gain a deep understanding of what consumers want from an insurance product. Carriers must be able to develop such products, bring them to market quickly, and just as quickly adapt them whenever their customers change their minds.

Different customers, different products

It’s an over-simplification, but there is a trend toward three basic types of product:

  • Customized, feature-rich products which require significant advice to be sold.
  • Products that can be easily configured to improve their suitability to individual customers, and that can be cost-effectively sold to the broad middle market.
  • Simple, inexpensive products that have basic selection advice and configurability built into the various options. Developing these products requires efficient processes, standardization and scale.

The watchwords for the future are flexibility and agility, especially as demand becomes less and less predictable. All we know for sure is that the products of tomorrow will be different from those of today. Insurers that cannot monitor changes in demand as they happen, and struggle to adapt their product portfolio to these changes, will spend all their time playing catch-up.

In my next blog, I’ll talk about the role of multi-channel distribution in getting these products to an increasingly demanding customer base. To read the earlier posts in this series, click here.

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