As an industry under immense scrutiny, life insurance faces low levels of engagement and financial literacy which reinforce the misconception that the only benefit insurers provide is the payment of claims.
It is not uncommon for insurers to discover that customers do not value life insurance until they understand it. This is often the case with disadvantaged members of the community – often the members of society who would most benefit from having life insurance. Group insurance is valuable as it helps to protect those who are less likely to be able to afford it or otherwise seek it out.
Currently there is a clear gap in awareness for members, many of whom do not understand their default insurance cover or are even aware that they have it. This can mean that cover does not meet the members’ needs or that they fail to take advantage of it when they can claim.
AIA research has found that awareness is low – only 3 in 10 working Australians know they have insurance in their super. However, once aware and informed, 75 per cent think it is valuable.
It is imperative that the insurance industry works diligently to shift consumer views away from a model focused on the payment of claims, to one with a broader agenda paying attention to community engagement and the health and wellbeing of its customers.
To achieve this, insurers need to change the way they operate—from being a provider that not only helps customers during their time of greatest need—to also delivering value as soon as engagement begins, to become a long-term, trusted and engaged partner.
Despite the changing consumer landscape, life insurance remains a complex financial product and it is imperative that insurers and trustees improve the lines of communication with customers to ensure policies are explained and understood. Insurers work in close partnership with trustees and are making greater efforts to support them to improve the relevance of the product to the consumer.
Steps are also being taken to simplify insurance products and definitions, so they are not laden with jargon and legalese.
There is increasing awareness of the growing need to design products that cater for the changing nature of employment in the 21st century. Historically, products have been designed for a more permanent workforce, but the shift towards more casual and contract labour, as well as the gig economy, means that traditional products need to evolve to stay relevant and cater to the current working environment.
Increasingly, insurers are talking about greater customer engagement or “customer centricity” as a foundation of business, brand and marketing strategies. By developing a genuine understanding of customer needs and concerns, customer centricity can harness the power of data, digitalisation and segmentation to connect and engage with customers.
Further empowerment of customers can be achieved through the greater use of digital channels which open other avenues to engage and interact.
Digital transformation and heightened awareness around health issues are driving increased interest in personal fitness and wellbeing. By connecting with customers via wearables and other sensor devices, insurers can build deeper and more significant levels of engagement. Hyper connectivity and smart technologies are revolutionising the industry, allowing companies to tailor risk. This not only improves efficiencies but allows insurers to focus on customers on an individual basis, which will be particularly beneficial to those requiring special attention.
By undergoing a thorough digital makeover, insurers can safeguard themselves over the long term to further transform and enhance the customer experience. A comprehensive digital strategy will provide flexibility, efficiency and agility to respond to industry changes and increased consumer demands.
Digital transformation and heightened awareness around health issues are driving increased interest in personal health and wellbeing.
Giving customers the knowledge, tools and motivation to improve their health is a great way to transform customer engagement in the insurance industry. AIA’s Vitality programme, for example, encourages customers to keep track of their health and fitness activity by incentivising healthier choices; offering rewards and discounts for adopting a healthy lifestyle. Relying on data science, capturing physical activity data via seven different methods, integrating with over 100 different wearables and free apps, Vitality helps members learn more about their health to improve their wellbeing.
Once members sync their wearable device with the programme, valuable synced data drives the AIA Vitality ‘active benefit’ where members receive $5 every week for hitting their active targets. When members hit their weekly target, they can choose to receive a voucher or gift it to a charity.
These types of benefits incentivise and motivate members to be healthy and get rewarded for their efforts. They also allow data scientists to generate insights such as reporting a 32 per cent increase in members’ exercise intensity following the introduction of Vitality.
In turn, the adoption of a healthy lifestyle will typically lead to fewer claims and better return-to-work and wellness outcomes.
Leveraging the latest technology is a critical part of the industry’s strategy to deliver exceptional customer experiences and maximise the efficiency and productivity of operations.
There is significant upside from deepening relationships with existing customers and by attracting new ones. However, to capture this opportunity there is a need to pursue a customer-centric vision where insurers can gain a better understanding and continue to meet customer requirements.
A key enabler of this will be data capabilities which provide deep insights about customers that can be used to engage them, as well as to build and strengthen existing relationships.
To deliver on this strategy, insurers need to continue to evolve and invest in product innovation in order to maintain the status as a trusted partner and leader, so as to future-proof the business over the long term.