Insurance Must Rethink Its Traditional Role as a Premise no Longer Sufficient - Examine

Insurance Must Rethink Its Traditional Role as a Premise no Longer Sufficient - Examine

 Insurance must rethink its traditional role as a premise no longer sufficient - examine - The insurance industry has consistently fulfilled its promise of providing capital to compensate for risk and reimburse losses. However, a recent study suggests that the traditional premise of insurance is no longer sufficient for consumers.

Instead, the attitudes and behaviors towards insurance are increasingly driven by purpose and focused on preventing accidents.

Consumers want insurance companies to take part in addressing the biggest challenges on the planet, such as climate change, aging populations, and healthcare shortages. Additionally, they desire to minimize risks in their daily lives, as per a survey conducted by Bain and Company.

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Many consumers (80%) want insurance companies to incorporate environmental, social, and governance (ESG) concerns into their business model. More than a fifth (19%) want insurance companies to recognize their efforts at healthy living.

Despite respondents expressing a strong preference for risk prevention services in auto, home, life, and health insurance, few utilize the current offerings in the market.

Only 4.3% of Americans said they utilized insurance services from their insurers, while the figures were much lower for Singapore (4.1%), Switzerland (2.7%), Japan (2.5%), and the UK (2.1%).

Bain & Company, a consulting firm that specializes in management, conducted the study in collaboration with Dynata, which surveyed 28,765 people in 14 countries.

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Consumers want more. The [traditional premise] that insurance merely facilitates the capitalization of losses no longer suffices, said Tanja Brettel, executive vice president at Bain and Company, during an Insurtech Insights Europe conference in London earlier this month.

Turbulence and vagueness increase the speed of consumer changes

The interest of consumers in ESG has increased due to the turbulent and uncertain environment that exists today, according to a report by Bain and Company.

Extreme weather events, disease and the current pandemic of Covid-19, aging populations and technological disruptions are all contributing to a significant increase in the number of risks present, as well as the different types of risk, the World Economic Forum's Risk Report stated.

The confluence of all of these factors has led to an identity crisis for insurance companies, which are experiencing an increased demand for the "functional elements" of their value proposition, according to Bain and Company.

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Reducing risk, alleviating pain and facilitating transactions are just a few of the primary benefits that consumers expect from their insurance providers. However, companies must quickly adapt to provide more significant social impact, life-altering, and emotional value.

It's difficult to perfect the fundamentals. However, consumers still want more," Brettel said during the audience participation at Insurtech Insights Europe.

They want to be compensated, companies are supposed to be ethical, and their insurance company should invest in their health.

Why aren't risk prevention services from insurance companies connecting?

Risk reduction and prevention are the new frontiers for insurance companies, according to a report by Bain and Company. However, if consumers want to be proactive in combating their risks, why aren't they utilizing services offered by their insurance companies?

It may be that many risk prevention initiatives are centered on the insurance policy, rather than the customer. This was stated by Brettel.

One specific example has demonstrated the benefits of a service that focuses on the customer's needs. Life and health insurer AIA's Vitality app had over 300,000 registered users in the first year it was released. The app, which is intended for young families in Thailand, provides information on health, tracking events in the family, and vaccines, it also has a forum for online parenting.

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They began with the customer, rather than attempting to introduce their products to the public. They chose a demographic that lacked needs and dedicated their product to them, said Brettel.

From having a distribution model that was "forceful" to one that was "pull"

As insurance companies redefine their role in the market, agents and brokers have a significant role to play.

According to Bain and Company's study, carriers will need to alter their distribution model from "push" (which is focused on acquisition) to "pull" (which utilizes data and analytics to address the needs of customers and prioritize them).

This implies that brokers and agents will have a different approach to their business, spending less time on low-value tasks and instead focusing on building relationships with their carrier partners.

In many markets, the traditional sales force has a significant role that is not only to promote adoption, but also to increase sales and convert online purchases into in-person sales, said Brettel.

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Re-creating the function of insurance

The transition to preventing risk and pursuing purpose will take longer for most organizations. Brettel advised leaders not to expect immediate monetary gain from this shift. However, she acknowledged that the ultimate outcome would be beneficial.

Don't expect it to be financially successful in the first year. It's necessary to have patience to construct that. The crucial thing is to focus on the definition of your monetization path." She continued.

This concerns the customers. This is concerned with re-establishing the value that is attributed to customers. The desire of the customer should be the primary focus."

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