In the past few blogs, I’ve very much been talking about the state of innovation in insurance as shown in research, and how insurers should think about getting a solid innovation process into place. In the next few posts, I’d like to consider some innovations that could inspire insurance companies.

I’ve really been greatly stimulated by a fascinating talk my colleague, Mark Halverson, delivered at the Next Bank Asia conference recently. He themes his talk around the new customer in financial services—Customer 3.0—and much of what he says is very thought-provoking for insurers.

His portrait of Customer 3.0 is somebody who is connected virtually all of the time, increasingly using a mobile device to do so. Customer 3.0 is highly informed, using the Internet both to research and purchase products—and 65 percent want to be able to customize whatever product or service they are buying. Customer 3.0 trusts “the crowd”, is rushed for time (so transactions should be efficient), and is price-sensitive.

This new breed of customer has dramatically heightened expectations, and industries other than financial services are setting the standard for how those expectations are to be met. It’s not enough to measure Customer 3.0’s current levels of satisfaction—high satisfaction levels in the past do not guarantee loyalty in the present. Customer 3.0 is ever ready to change providers the moment his or her expectations are not met.

In other words, insurance (along with banking) will have to live up to the standards set by other industries in delivering an experience that gives value to customers. Soberingly, an Accenture survey of banking customers in 2012 showed that fully 75 percent of respondents expected the main source of innovative customer banking propositions to come from competitors within other industries. The same is likely to be true of insurance, I suspect.

The other sobering consideration is that Customer 3.0 is increasingly turning to his or her virtual communities for advice relating to financial matters. Insurers need to come up with a way to ensure they remain a key source of trusted information about risk mitigation by consumers.

The key word here is “experience.” Mark argues, and there’s no doubt he is right, that Customer 3.0 is looking for a service provider who delivers what he or she needs. This is not a specific product or service, but an experience that supports a particular lifestyle. It’s, for once, a genuine sea change, and it means that insurers need to rethink what they do.

Next time, some suggestions as to how innovation can help insurers think their way out of this situation.

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