Opinion / 19 September 2019, 8:00pm / Michael Goemans
JOHANNESBURG - As an industry life insurers should be asking themselves some pretty tough questions. One that should be keeping everyone up at night is, have we truly seen innovation (or at a minimum, evolution) that unlocks deep structural value for clients or is the sector instead paying lip-service to innovation, while maintaining its status quo?
Historically, insurers have believed that they were innovating by proliferating product.
This perpetuated a systemic push to sell insurance products that claimed to meet consumer needs by creating multiple iterations of themselves. In reality, this simply fed the pipeline distribution and did little to enhance client experience or value.
The status quo puts the needs of the insurer ahead of its clients - the opposite of what innovation should be. The deluge of product has even led to regulations ensuring offerings aren’t unfairly pushed on to clients by overzealous insurance people.
While there will always be a need for updated products, this is not the ultimate innovation.
If we are to challenge the status quo, we urgently need to reinvent the innovation agenda.
Client experience and access “on their own terms” is where the future sits. Simplicity (without losing comprehensiveness) should consume our attention. We need to deliver gold-standard products, and solutions that enhance relevance, without leaving the client behind.
Enhancing relevance requires a long, hard look at three focus areas:
* Personalisation: product evolution is not personalisation. Addressing the needs of each client has opened the door to areas like genetic testing as the ultimate personalisation tool, offering financial solutions tailored specifically to individual requirements.
Science allows today’s insurer to know clients so well that they can match their needs continuously. The real value comes when the insurer manages the client as a sample of one, building a wider financial service offering that’s clear, transparent and customised. A recent partnership between Investec and DNAFit is an example of this. DNA testing now gives the client insights around diet, food sensitivity, exercise response, injury predisposition, stress and sleep response. But this is not true innovation, just yet.
While genetic testing can tell a person a lot about their current health status and what medicine, diet and exercise approach will help them manage it most effectively, it’s the predisposition factors that allow insurers to create bespoke solutions for individuals instead of the status quo, the one-size-fits-all approach.
Genetic testing can indicate risk disposition for a range of conditions and allow pre-emptive treatment that can decrease risks before any symptoms appear. While we cannot ever remove risks completely, we can decrease them - something often referred to as the “Angelina Effect”, where actress Angelina Jolie opted for a double mastectomy given her genetic disposition to breast cancer.
Extreme as an example, but nonetheless an indication of where a client can opt to manage their circumstances. It’s just that - the opportunity to make informed decisions. Increasingly, insurers are finding the tools to keep their clients healthy instead of simply managing situations when they become ill. This is how an insurer prioritises the client, based on the understanding that insurer needs are in fact aligned with their clients’.
These are solutions for specific client needs rather than to fit a business model. How this is delivered in a high-touch, digital-first way is what will create exponential value.
* Technological enablement: modern digital enablement is increasingly the business mode of choice. But it’s not technology for technology’s sake.
True innovation is when insurance embraces technology to give clients a better understanding of their insurance needs and health risks, so they can manage them better and enjoy a better quality of life.
Technology makes insurance a seamless process. It empowers clients with knowledge and an appreciation of its value. The future of our business is about clear, transparent value-add to clients.
Part of delivering simplicity is innovating around the process of buying insurance, risk assessment and medical underwriting. This process has long been a significant inconvenience for clients, making it ripe for innovation. Matching this with personalised, gold-standard products is what technology innovation looks like in the insurance space right now.
Modern life insurance is now technology-enabled to ensure every client can make the right lifestyle choices, and choose the appropriate insurance product with the right cover, at the right time.
* Client-centric solution design: our business is about clear, transparent value-add to clients. It’s not just a focus on diet and wellness, but rather clear offerings based on fact (science) to help clients objectify information in their own lives. For example, along with objective advice and the choice on how to engage us; we are able to give you access to understand optimal diet and exercise information, matched with a personalised solution based on your individual needs.
The changing world also means the sector must relook what it considers relevant in terms of coverage. Stress, for example, is a marker for mental health and, linked to predisposed conditions, there is a level of predictability around what cover could be required.
On one level it raises questions around product innovation to meet needs, but at another level raises an ethical responsibility to provide a life-insurance solution addressing this.
At scale, looking at the lifestyle of professionals is a move in the right direction for client-centric solutions. This is innovation that we can - and should - be delivering.
Key to this is innovation that benefits clients first, which means that we would not receive client DNA data or use DNA testing to prejudice clients on their insurance policies, but rather keep the focus entirely on helping clients make better and more informed financial and health choices.
From an insurer perspective, this approach is also about de-risking in a transparent, open way. For example, pharmacogenomics can now also tell us how a person will react to medication in areas like cancer and mental illness. This has massive implications for optimising treatment rather than wasting time on trial-and-error approaches.
Choosing genetically indicated treatment timeously has huge meaning in terms of income protection, allowing people to work and earn for longer, and minimising treatment periods. Overall, there is also room for innovation around the type of insurance product offered.
South Africans are often adequately covered when it comes to insuring for our death, but not if something goes wrong and we are unable to work due to illness or injury. This means significant opportunities around income protection, disability and severe-illness cover.
The question then becomes how to give clients the insurance they need, and help with their health in a personalised way that adds value and adapts over time. Our sector needs to realise this and respond appropriately.
The insurer that does this best will have the agility to identify gaps, the courage to act on them, and the heritage and client equity to inspire trust. This is innovation.
Michael Goemans is the chief executive of Investec Life.