Enrico Pruis is Business Development Director at Virtual Affairs "My biggest motivator is allowing the company I work for to be best in class and, at least in some way, contributing to a better world."
By Enrico Pruis
Insurance on its own is not a unique selling point. Neither is good coverage. It’s therefore no surprise we see a change in the value proposition of insurance companies. To offer a great value proposition one needs to look at what the modern consumer considers to be valuable. Key words are sustainability and value identity. Particularly the millennial is known for seeking a way to contribute to the world within his own circle of influence. Winning brands position themselves on values as biological, vegan, sustainable, ecologically friendly, zero carbon footprint, positive body image and circular. Insurers and banks respond to that. There are several sustainable investment propositions already. Some have only just been developed, some have been around longer but now seem to experience traction and attention in the market. But what about insurers?
The individual interest
Research showed years ago that millennials experience an enormous distance towards their insurer and insurance as a given. The core need that is fulfilled by an insurance company, experiencing safety and protecting the financial position, is an individual need. It is the individual safety, the private financial position. Although the origin of insurance lies in sharing a risk as a community and is at its core therefore a social phenomenon, there is – to a certain extend – an amount of selfishness in getting an insurance. It certainly does not have a sexy world improving image. How do we bridge the gap towards the millennial other than by not investing the corporate assets in guns or fossil fuel?
To top this off, the core needs being experiencing safety and protecting the financial position can’t even be fully fulfilled. Even the best insurance does not offer safety. At most, it offers protection for an excessive financial impact when dealing with one or more setbacks. And it offers access to good healthcare in case of a health insurance. Ones financial position can only be protected to a certain extend, due to the indemnity principle.
But the youngest generation seeks more than just fulfilling or protection one’s own interest. They seek an Instagram-worthy value proposition that under-promises and over-delivers. By widening the proposition of security and safety into contributing to a safer world, you bring true value in the context of insurance. A mission like that can also be credible. A claim that’s too invasive or too big is incredible and, with that, unreliable. The youngest generation has principles but is certainly not naïve. Still, this mission is challenging to live by. To truly contribute to a safer world, you must instigate a change in behavior. In insurance terms: you focus on prevention.
Mission insurance in effect
There have been several successful initiatives in this area. An example in South Africa is Discovery, that offers a proposition of security and safety. This car insurer wants to make South Africa a country with safe drivers. In the UK, Discovery Insurance started a label called Vitality. Recently Vitality announced to launch this initiative to the Netherlands together with ASR verzekeringen. This healthcare initiative is the first organization that makes their clients feel they have improved their health because of the insurer. Vitality has developed a program with ways to improve their client’s life style. Health insurers have tried this before, but clients rarely credit the insurance company for their health improvement. Based on a free health check, clients receive suggestions for improvements. They receive loyalty points for executing on them, incentives for good behavior. This proposition is successful because the client doesn’t receive a simple discount for the policy, but on training shoes and other benefits that in turn contribute to their health. Clients credit the insurer for this continuous improvement.
Driving more safely
In Canada newcomer in the car insurance industry Onlia, an Achmea initiative, offers a community experience. All consumers, so also non-clients, are encouraged to download the safe driving app, called Sense. This app stimulates safe driving behavior. Aside from improving driving, the data can be used to improve the safety on the public roads. This powerful brand promise for a safer world is the message in Onlia’s brand promotion. Once in the app, potential clients are invited to get insured by Onlia. Thus, the app uses the community as lead generating pool for the insurance product. This approach solves two things:
from the very first moment it emphasizes the added value of this insurer and offers a positive experience.
clients come into contact due to an intrinsic motivation to drive more safely. It protects Onlia from a client base that stems exclusively from the switch market. The switch market traditionally is a less attractive client base, since high claim clients are more likely to switch.
Not just anyone can become an Onlia client. Onlia has found a very positive way to create a client threshold. You must acquire points with showing good driving behavior. When you have enough loyalty points, you can apply to become a client. This is different from the Dutch ANWB. The ANWB is also rooted in safer driving initiatives, but anyone can apply, after which clients are rejected if they don’t meet certain predefined criteria. The outcome is the same: selective insurance. But Onlia managed to give it a positive spin. Once accepted Onlia assumes the client has the same core values as they do. That assumption about their clients means they don’t make a fuss about claims payment. This is done instantly upon making a claim. The paperwork will follow later.
Another way to cut out the individualism in an insurance is to bring the insurance proposition back to its origin. A business model based on peer-to-peer services can do just that. With peer-to-peer propositions the client knows he is not only insuring his own safety, but also contributing to the wellbeing of a self-chosen community. Especially when the community offers a representation of his own values (Vegans, Vintage lovers, Artists etc.) the traditional groundworks of a Mutual are given a new millennial-proof spin. An initiative as InsPeer in France plays into this sentiment. Insurer Lemonade includes charities into their community by making them beneficiary of the profits they make. We can expect other parties to enter the market as well, focusing on different target audiences. Crowdfunding, peer-to-peer lending, peer-to-peer insurance and insurance initiatives combined with sharing platforms and other community services answer to a need of the new consumer to be aware of who exactly receives their money and who ultimately benefits.
Insurance for the new consumer goes beyond a different design or fine-tuning the coverage to the need of a target audience. It’s about redefining success and propagating a sincere identity. Whoever finds and communicates this identity and manages to connect to a wider audience will be the new leader in the insurance industry.