Customer onboarding in any sector requires efficient processes and innovative products. It is difficult to attract fresh customers unless you can create customized offerings that meet their needs. Product innovations require a deep understanding of the needs of the customer, based on their lifestyle and the ability to package these into viable products and reach them quickly. That is the need of the hour in the Insurance Sector but it is not happening at the pace that is needed. Everyone agrees that product development is a must-have competency but very few believe that companies have a process that helps them to develop innovative products. Unless the pulse of the customer is understood, it is extremely difficult to judge what he/she needs. Merely keeping pace with the competition will get you nowhere. It is important to analyze the new lifestyle of the customer, the changing world landscape, the new risks that arise and the possibility of creating new products that address these needs. In an internet linked world, the customer has access to more information and will quickly move to the source that meets his/her needs more efficiently. Traditional insurance companies are struggling to keep pace with their digital competition in this area.

Let us take a quick look at the factors that should be taken into account when focusing on product innovation.

The very slow pace of change compared to the demand

The Asian market is extremely diverse in terms of culture and customer needs. Insurers need to be nimble-footed to identify the customer requirements. The ageing population in China combined with the fall in birth rates has created a generation of adults in their 40s and 50s who are juggling with dual responsibilities of taking care of parents and young children. This raises the need for health insurance, retirement planning, wealth building, education expenses. The Covid-19 pandemic has accelerated the need for several products. Yet, insurance companies, on an average, take close to a year to come out with product variants. The digital insurers on the other hand are much faster and can do it in a couple of months. If they don’t raise their game and speed up the change process they could soon be facing competition from app developers who could snatch the limelight from their slow cousins.

Understand the Customer Need and customize your offering

We live in a fast-paced dynamic world where customer needs are evolving all the time. It is important to feel the pulse of consumers to identify the type of products that suits their needs.

No big leaders have taken over the leadership in the insurance sector as it is highly regulated with entry barriers but existing companies cannot afford to get complacent. The customers who are millennials have very little patience and wouldn’t hesitate to take their business to a newcomer if the customer experience is better and tailored products are made available.

Use Data Analytics

A customer’s internet behaviour throws up sufficient information about his lifestyle, wants and aspirations. Insurtech companies use this information with Data Analytics to study the needs of customers and predict their behaviour. Augmented automated underwriting is based on artificial intelligence which helps the insurer underwrite the risk with better levels of accuracy. When insurers tie-up with digital apps they get access to a lot of useful information regarding customer behaviour that can be converted into new products The traditional sources of information about consumer behaviour which involve focus groups, surveys etc should continue to provide insights to insurance companies regarding the next demand gap to be filled. Tech giants like Zhong An and Ping An are leading the way in Asia. Zhong An which was launched in 2013 by a consortium including the founders of Alibaba and Tencent innovates on a wide range of low-cost niche policies such as renter’s insurance or buyer’s insurance for online purchases. Gigacover, based in Singapore sells insurance policies to independent contract workers ranging from maids to software engineers to delivery boys. Pasar Polis in Indonesia sells policies with an instant claim feature. For example, if you buy travel insurance from them and your flight gets delayed, your claim gets processed automatically. It is time that insurance companies raised the bar, identified such needs and delivered customized solutions else they could run the risk of being overtaken by the digital insurers.

Maximize Returns from existing product Range

Most insurers will have the same story to tell you. Their product range will have 1-2 star performers while the others barely contribute to 10% of their sales. It would make more business sense to evaluate the product portfolio regularly and trim or modify the worst performers. It is worth analyzing each product independently and making a critical assessment of the commercial soundness of the product and its pricing. There is no point in adding new products to the portfolio unless you have optimized the ones already existing in the product range. Sometimes even a small tweak or modification can alter the product and make it more attractive to customers.

Rejig the product innovation process

Product innovation should be a continuous process, not a stand-alone activity. The need to be constantly looking for new innovative ideas that can benefit the customer and address his/her requirements should be built into the collective organization psyche. The customer needs should be central to the process and a team should be focusing on him/her along with a data analytics expert and an app developer. The sole purpose of this team would be to use available data from multiple sources, apply predictive data analytics to arrive at his/her current insurance needs and what would be most beneficial to him/her and endeavour to create a product fitting the same.

Once the new products are launched, insurers should monitor the customer acceptance and customer onboarding data. This would be useful in analyzing the effectiveness of the innovation and offer clues for modifications if needed. The key is to keep introducing innovations regularly to keep the interest of the customer growing. Insurers should also be ready to learn from product failures and use these experiences to develop more customer-friendly products.

The world is rapidly changing and Covid-19 has accelerated the pace. Insurers need to take a long, hard look at the new reality and adapt new techniques without any further delay. The insurance sector needs to move away from conventional norms of being focused only on risk and switch to a customer-centric approach. Once the customer delight is assured, everything else will automatically fall in place.

Reference Link
https://www.ey.com/en_gl/global-insurance-outlooks/how-innovation-can-help-insurers-in-asia-pacific-seize-opportunities
https://www.mckinsey.com/industries/financial-services/our-insights/product-innovation-the-new-imperative-for-insurers-in-asia
https://www.ey.com/en_gl/innovation-in-insurancehttps://www.entrepreneur.com/article/355337
https://www.bain.com/insights/customers-know-what-they-want-are-insurers-listening/