All my recent thinking on microinsurance has prompted another train of thought—or, rather, has given me a new angle on a broader challenge that the insurance industry faces. The challenge is to avoid being commoditized, to fight off new competitors from outside the industry and to improve margins.
The only way insurers can do all this is to become more and more customer-centric, integrating themselves into their customers’ lifestyles and so providing a solution rather than just a product. To do this, they will have to become digital insurers in the fullest sense of the word.
The pivot on which everything depends—the reason for digitizing and its goal—customer-centricity.
Conceptually at any rate, becoming customer-centric seems deceptively simple: Learn more about your customers using the new data sources at your disposal, and then give what they want.
The trouble is, I fear, that insurers tend to think within the insurance box. And while providing better and better insurance products and solutions is obviously good, I don’t think it’s going to be enough for long-term success in the kind of hyper-competitive business world that we already see.
Here’s where the lessons from microinsurance come in. Microinsurance, which offers cheap and easy-to-buy insurance to the poor in emerging markets, must offer precisely what its targets want—they simply don’t have the resources to buy anything but what is essential. These are typically markets that were once thought to be of no interest to insurers, and yet now are generating significant revenues. This is only possible thanks to a detailed understanding of what the market needs and when, and a willingness to look beyond the confines of traditional home, automobile and life insurance.
The same concept—now called small-ticket insurance—is catching on in affluent markets. The dynamic is different, but the principle is the same: be at your customer’s side, ready to meet his or her current need.
What’s wrong with this picture is that it all too often represents a wasted opportunity for the insurer, as I’ll explore next time.
Read the Accenture Digital Insurance Survey to learn more about the drive towards customer-centricity and the threat of new entrants, and the Accenture Customer-Driven Innovation Survey to explore what insurance customers want.