Reshaping the Life Insurance Ecosystem through Customer Shared Value

There is little doubt that the life insurance industry has been cast in a rather unflattering shadow of late. The days of complacency and a ‘one size fits all’ traditional approach are coming to an end, so now is the time for a refresh and true innovation.

With more than two decades in senior insurance and consulting roles, I have had the bird’s eye view of insurers and superannuation funds’ insurance practices, and see the challenge of successfully aligning shared value cropping up over and over again.  This needs a complete strategic refresh.

Over the next few weeks, I am going to write some articles that address the concept of creating shared value through insurance partnering and how this would strategically and practically apply across the life insurance value chain.

No life insurance organisation is an island; each must exist in an ecosystem of its making.

No life insurance organisation is an island; each must exist in an ecosystem of its making

What does the life insurance ecosystem look like?

When we think of an ecosystem in life insurance, at the most traditional level this covers advisers, customers, reinsurers, insurers and regulators, and some third-party administration providers.

Today and in coming years the life insurance ecosystem will rapidly expand to include new, non-traditional insurance sources, and will be driven by a competitive challenge to find smarter, more efficient, more cost effective and customer-centric ways to do business.

Some examples of this are the integration of wearable devices, doctors accessing and providing new data to support patients’ return to work and better health outcomes, customer segmentation models, and leveraging of health and banking data.

The level of change to the traditional ecosystem brings significant opportunities to start aligning smarter shared-customer-value partnering arrangements.

What is Shared Customer Value?

Creating shared value (CSV) is a business concept first introduced in 2006 Harvard Business Review articles. The central theme is that the competitiveness of a company and the health of the communities around it are mutually dependent.

In the follow up 2016 HBR article “The Ecosystem of Shared Value”, Mark Kramer and Marc Pfizer emphasise the need to assess the conditions to advance shared value, which businesses need to foster to gain competitive advantage

The article explores the need for fresher thinking and collaboration as key traits to enhancing shared value. It focuses on 5 key elements of collective impact:

A common agenda: shared vision for change and a joint approach to reaching a solution
A shared measurement system: how success will be measured and reported
Mutually reinforcing activities: each stakeholder focuses on ‘what it can do best’
Constant communication: structured communication to build trust and momentum
Dedicated ‘backbone’ support: to ensure that all working groups remain aligned

How does Shared Customer Value apply to the life insurance dilemma?

Whilst a lot of energy has been spent recently in the life insurance industry in attempts to get closer to the customer and enhance service, unfortunately much of this focus has been inward and not enough yet has been done to leverage other ways of thinking.  As a result, there is still an inward focus on designing processes and systems and services to support the business model rather than the customer.

Simply put, there is still not enough being done to ask the customers what they think. They are the ‘end user’, so shouldn’t we be asking them more often to help us design our insurance products and services?

Simply put, there is still not enough being done to ask the customers what they think.

Customer-led innovation requires a holistic, strategic focus and a re-set. This won’t happen overnight and nor should it.

We need to focus on the claims and underwriting value chain. The ease, quality, speed and simplicity of the underwriting and claims handling processes, tehcnology and communications is where I would recommend an initial focus.

A shared customer value focus means that you need to expect to be openly critiqued by your customers on the services you provide today. But you need to ask them how they would like these services to be tomorrow if we are to move forward.

Customer feedback needs to be as close to real time as we can get, allowing insurers to test new concepts, refine and correct as they go.

Customer feedback needs to be as close to real time as we can get

In my next article, I will explore how shared customer value can be successfully embedded across the insurance value chain, what insurers and super funds need to be doing, the ever-critical role of integrated marketing, and the new skills required to strategically and structurally support the operational value chain and engine rooms of claims and underwriting.

In the meantime, if you would like to discuss how an Independent Insurance Review can support your customer and insurance innovation strategy, drop me a line here and we can grab a coffee. I can share with you more on why your customers are worth it and my top 3 areas in 2017 to start investing in.