Kevin Claypoole-McCloskeyManaging Director
If you are an insurance marketer, you need to read about these five trends and the steps you can take to stay one step ahead of them.
1. The war for talent
In insurance today, talent is more important than ever, which may seem counterintuitive given that many back-office positions (claims and customer service, for example) will be automated. However, insurers around the world need new talent and new skills.
Talent is now perceived as being just as important as technology in keeping pace with the changes occurring in the insurance sector. No amount of investment in technology can help a business compete if the workforce is under-skilled and working in analogue.
Less than 25% of insurance firms report significant progress in defining the skills that will drive their future growth strategy and improve workers’ and leaders’ skills1, however there is greater importance put on roles such as actuaries, data scientists and data analysts who can apply more ‘digital thinking’2.
Alongside the need to upskill current employees, 24% of global insurance CEOs are having to redefine the skills to drive future growth – and a further 24% are leading the direction for D&I strategies to attract a wider array of talent and ensure inclusiveness is achieved3. Beyond socio-economic, ethnicity and age, CEOs are taking a more active stance in setting the agenda for how organisations create a multi-skilled culture, consisting of employees with an array of skills to support business.
Marketing leaders will need to articulate a vision for the types of skills that will be critical to the future of their business, and actions they’re taking in order to upskill the current workforce.
D&I plays a core role in this, by surrounding the organisation with an array of multi-skilled employees5. Marketing activity needs to reflect this audience in order to attract the right talent and showcase the strides the organisation is taking in order to thrive.
Aside from the functional gains to be had from D&I, marketers need to drive messaging on how purpose trumps gain – the importance of how brands can balance social impact and strive to be on the right side of societal change.
2. Adopting emerging and disruptive technology
Building on the previous point, disruptive new technology and access and availability to large data sets will continue to drive and shape the global insurance industry – but having the right talent in place to fully leverage these technological investments is imperative2. InsurTech brands are able to assist in helping to address the talent gaps many traditional insurers face in establishing new capabilities.
Adoption of IoT, connected technology, blockchain and AI remains mostly in the experimentation stage, however there are a handful of brands that have already seen promising results, including Lemonade, Shift Technology, Carpe Data and Teambrella6. With blockchain becoming an enabler for increased transparency, AI being used to streamline the customer experience and IoT and robotics driving process automation, technology can be harnessed by insurers to develop new value propositions particularly related to financial wellness, on-demand subscriptions and modular insurance policies
As mentioned previously, we’ve seen great strides among brands such as Lemonade and Teambrella where both have applied AI, blockchain, behavioural economics and alternative data sources to offer customers alternative insurance cover, while incorporating user-generated content (UGC) and social impact as part of their offering. Although both brands have been able to apply technology to better meet customer demands, technology has mainly driven transparency through UGC and social impact through remodelling the premium mechanic. More than than 80% of premiums collected by insurers is lost to distribution costs7, but Lemonade’s application of digital capabilities and AI allows it to donate excess profits from premiums
What this means for marketers:
Insurance isn’t perceived as having the same pizzazz as industries such as finance technology, renewable energy, health and media. However, the innovation leaps that are occurring in the sector are giving marketers a raft of new messaging to incorporate within content. Brands are taking leaps in evolving business operations and models, and exploring the new value propositions that can be offered as a result of technological adoption.
Although technology is new and exciting, marketers need to communicate the direct impact it is having on the business and, more importantly, the raft of new needs that can be met. A key question that needs to be answered is ‘what are the functional and emotional benefits being brought to customers?’.
Communicate the wider impact technology is having on the business but consider the impact change will be having on the brand and how it is perceived.
3. InsurTech partnerships
According to recent research, insurance industry executives highlight the burden of legacy systems combined with the impact of Covid-19 as a key influence on the difficulty in adopting new technology cost perspective8.
Traditional insurance firms are forging new relationships with InsurTech start-ups, giving them a means to accessing new technologies, testing new business models and helping drive the innovation agenda many consumers are looking for. We’ve already seen great examples of how brands are incorporating new technologies to optimise not only the insurance policy process but the customer experience, a key priority across the insurance sector9.
AXA XL’s Connected Cargo solution in the UK focuses on real-time cargo tracking solutions, allowing customers access to 24/7 monitoring and access to AXA XL’s risk engineers to develop loss-prevention plans. The solution incorporates sensor technology, placed on containers, to provide more accurate tracking factors, such as door-opening and shock notifications, geolocation, temperature and humidity. The data produced not only delivers a more reliable, streamlined experience, but enables underwriters to more accurately price and underwrite risk.
Another example is the partnership between Baloise and KASKO in Switzerland, launching a set of innovative mobile-first, modular insurance policies for single, personal items. Customers can easily take out insurance policies for items such as musical instruments, handbags, art, model ships, and trainers – ultimately, alternative investments HNWIs and UHNWIs have been choosing. Within the array of products offered, the company is successfully scaling into the thriving, small-ticket insurance space, having already sold thousands of policies around AI-powered watch insurance. Again, what’s interesting about this case study is the focus on using InsurTech firms to streamline and simplify the customer experience by allowing them to choose the duration of the cover themselves and allowing the AI solution to monitor the risk of single items.
What this means for marketers:
With a focus on streamlining the customer experience, insurance underwriting and reliability/risk management has become even more accurate as a result of innovative partnerships, and marketers now have the opportunity to deliver messaging around the pillar of innovation. But they also have the opportunity to deliver messaging on how investing sustainably, transparency and brand credibility are being used as key differentiators in a growing sector. Innovation is the name of the game, but the narrative needs to revolve around the benefit to the end-consumer (fairer pricing) and the evolution of the brand itself, in order to differentiate against existing and new competitors.
4. Tailoring products for fairer policies
With access to data sets becoming more accessible, insurance products are becoming more flexible as each year passes. Mintel has found that the pandemic has increased marketing focus on Gen Z and millennials due to the surge in ecommerce, online services and time spent online, while neglecting older generations who are inundated with messaging on care homes, staying safe and reducing financial risk10. As customers within their 20’s and 30’s (millennials) are now of the biggest population group, insurance firms now have their eyes set on marketing to this tech-savvy generation in order to stay ahead of the competition, following overall marketing trends11.
For many, this has left insurance brands in the difficult position of evaluating the sacrifice between an older, more stable and larger spending-powered demographic vs a large quantity of low-ROI, tech-savvy consumers expectant of product personalisation and stellar customer engagement.
With many firms striving to balance both audiences with distinct products and messaging, we expect to see more insurance brands incorporate data from IoT devices i.e. wearable technology and car telematics, into the insurance claim process as a way to showcase value behind products priced according to millennial needs and behaviours.
72% of people have used their car less during the period of Covid-19 or don’t use a vehicle anymore and given this drop there is a greater interest in usage-based insurance in helping to lower premiums and offer fairer policies given the effects of forces out of their control12.
What this means for marketers:
For marketers, messaging and content formats needs to be reassessed when considering repositioning for different demographics and even opens a raft of topics such as financial wellness, savings, spending, insurance premiums which contain vast differences across each of the demographic bands. For each demographic band, brands need to be conscious of the image they portray when appealing to new generations, and the effect it will have on other/existing generations. Applying an ABM approach to demographic marketing would be a great approach in maintaining a single-minded brand, but delivering tailored content appealing to the vastly different needs of each demographic- ultimately simplifying their brand experience.
5. Strategies: Preventative vs reactive approaches
By 2030 the amount of people aged 60 and over will have grown by 50% from 900 million in 2015 to 1.4 billion. Furthermore, diseases which are linked to lifestyle and behaviour i.e. Diabetes, heart disease and lung cancer will account for 71% of annual deaths globally and will represent an increasing amount of mortality risk. With the impact of Covid-19, mortality protection is at an all-time high however concern over mortality risk has decreased in markets and even amidst the pandemic, is expected to decline further13.
In the coming years, insurers will play an increasing role in in the health of their customers as life expectancy is set to increase and as health trends change continue to change over the coming years. We expect the factors mentioned above to motivate insurers to engage customers in shared-value communications and start to play a greater role in protective/ preventative advice and support14.
Customers are increasingly willing to share their data with insurance providers as long as there is a mutual benefit and are even willing to share information about their lifestyle, location and living habits for benefits such as i.e. personalised advice, premium discounts, quotes and accelerated processing claims. Brands such as Vitality are already ahead of the curve, offering Apple Watches as part of their insurance policy. Japanese brands are also migrating to a ‘pay as you live’ premium model with dynamic pricing. Customers who show regular healthy lifestyle behaviours will pay a reduced premium on their insurance, incentivising customers to take a more preventative approach to their health.
What this means for marketers:
Armed with further information behind customers, marketers can provide well-timed content which provides a focus on improving overall health and wellbeing in order to benefit financial wellbeing. Insurance, across a number of different verticals, is taking a more preventative approach as consumers look for content which helps to provide insight into actions, they can take in the immediate future to create long-term gain. Financial services marketers have a great opportunity to balance the benefit between overall health and wellness with financial wellness and deliver content which covers transparency and innovation on how emerging consumer needs can and will be met.
Marketers have a great opportunity to look at even broader out of category partnerships i.e. health and wellness fashion brands, hospitality and fitness and how they can help drive a new, highly differentiated conversation around emerging consumer trends.
We are here to help
Interested in getting to grips with building loyalty and supporting customers? If you want support with content that can improve customer loyalty and financial wellbeing, get in touch today.