The LIMRA Annual Meeting is always one of the largest gatherings of senior financial services executives in the world, hosting leaders from carriers in all regions, including Canada.
This year’s event was highlighted by a real sense that insurers are ready to embrace the future and, especially, support their commitment to their customers. Many of the conversations I had with carriers at the conference revolved around how much they value their relationships with their clients and understand the need for providing greater customer experiences going forward.
It’s obvious to all life insurers by now that disruption is coming, and competition is increasing. These pressures are being felt keenly because too often in the past the customers’ experience when dealing with insurers and agents has not been what it could have been.
It falls short of the types of interactions consumers have with companies in other industries. The challenge is sharpened by the born-digital insurtechs who have entered the market and threaten to win market share by offering those accelerated, highly-personalized experiences that consumers are used to receiving from Netflix or Amazon.
Different approaches to building closer relationships
When I asked carriers what they were doing to build stronger client relationships they offered a number of different approaches—from increasing staff at call centers to provide more human touches, to implementing marketing automation engines to enable them to reach out to customers more easily and more often.
Interestingly, for the first time I heard talk from insurance companies about getting into retirement planning as way of building closer relationships. Insurers are looking at integrating planning tools into their offering to help clients with a broader array of financial services on the wealth side.
Being able to have conversations about retirement and asset management with clients doesn’t just give insurance companies a chance to win back business from banks and robo-advisors, it gives the insurer more touch points with each client. It’s really about enhancing customer experience, building closer relationships and protecting the insurer’s business.
Placing bets on innovation in insurance
Insurance company leaders talked a lot about innovation. At LIMRA it was interesting that the discussions about future tech and innovation were not about hot-button topics like AI or the Internet of Things. Instead, carriers were more focused on customer experience improvements through good agent and client self-service portals or e-apps.
A big challenge with implementing these types of solutions is the difficulty of integrating them with decades old legacy systems. In many ways, the precursor to innovation is modernization. But I found that carriers are split into two schools of thought on the right way to successful innovate.
One camp firmly believes in first replacing their legacy systems before beginning significant innovation projects. The other half don’t think transitioning to a modern PAS adds value and are trying to implement front-end tools now to try and improve customer experience.
It will be interesting to see which bet proves the best over the next three to five years. Will those who go straight to front-end tools gain a competitive advantage, or will those who lay a modern foundation then be able to innovate more quickly and significantly to leapfrog their competitors?
The root of true innovation
My feeling is that true innovation requires modernization. Imagine that a company wants to develop a new product or enter a new market segment. They ask their actuarial team to implement a solution.
They could try to kludge together some patchwork solution, or they may be told, ‘Sorry that’s not possible on our old, core systems.’ With a modern, rules-based PAS they could develop new products quickly and easily—they could be truly innovative.
As Guy Kawasaki—Chief Evangelist Cava, and Former Chief Evangelist at Apple, said in his ‘The Art of Innovation’ session, we think that Silicon Valley is so successful because a lot of smart people know in advance what will work and they use that knowledge to create great products.
The truth is the industry succeeds because of speed of innovation. Tech companies develop new ideas fast, fail quickly and keep trying. When something works they draw a bullseye around it and say, “Yeah, I knew that would be a hit all along.”
So, although insurance is a risk averse industry, to really innovate executives should be encouraged to think outside the traditional box in which everything is calculated and mistake-proofed. Speed to market, quick judging of results and a willingness to fail forward are the roots of real innovation.