By now I hope I’ve persuaded you that the potential of small-ticket insurance, in both mature and emerging markets, is significant indeed. In the former it offers a big profit margin, while in the latter the sheer scale of the opportunity is irresistible. But it won’t fall into your lap. To succeed, insurers will have to be persistent, innovative and smart.
Perhaps most importantly, they and their people will need to understand their customers and the types of risk they face. This will be easier in the more developed countries, where information about customers, their interests and their behavior is more readily available. In developing countries, however, data will be less abundant. To get the insight they need, insurers may have to collaborate with experienced local players – either within or outside of the insurance sector. And because some of these markets are already quite developed, it will be difficult for insurers to assert themselves as the major partner in collaborations such as these.
Carriers – the companies as well as their people – will also need to be innovative and agile. Innovative to develop products, distribution mechanisms, operating models and marketing campaigns that will work in the particular circumstances that confront you. And agile, because trial and error is likely to be part of their path to success. What’s more, a key feature of their target customers, in all markets, is that their needs, preferences and actions are constantly evolving. If insurers can’t adapt quickly and effectively, they’ll soon be left behind.
Insurance companies will need a sophisticated analytics and big data capability, or at least exclusive access to it, to plan and roll out new products, marketing campaigns and sales drives.
Also essential is operational simplicity. It not only makes the company more agile, but also more efficient. This is important in the high-margin affluent market, where distribution partners demand big commissions, and vital in emerging markets, where break-even has eluded many of the less efficient carriers.
I am firmly of the view that, to succeed at small-ticket insurance, insurers need to use the same operating platform, marketing campaigns and sales and service channels for their small-ticket offerings as they do for their other products – at the very least, their operations and exchange of innovation in mature and emerging markets should be integrated.
And last, but certainly not least, their products will need to be easy to explain, easy to buy, easy to pay for and easy to claim on. Which I’m sure you don’t need to be told is a lot easier said than done.
At Accenture, we’ve found that most small-ticket insurers can be plotted along a maturity path which correlates quite convincingly with their success in this sector. In my next post I’ll discuss the capabilities that define this maturity – I hope you’ll join me. In the meantime, you can read the earlier posts in this series by clicking here, or you can download our full small-ticket insurance report.