2020 Vision
Strategic Planning

Meaningful Differentiation

In most mature markets, you're essentially engaged in a zero sum situation. In other words, your customer was someone else's customer, and vice versa. In those “hypermature” markets, cost-focused due diligence tends to dominate.

When I think about what we need to do as an industry, we need to change consumption patterns for buyers of insurance. It is critical that we, as an industry, change passives to enthusiasts. Specifically, taking buyers who tend to focus on price—the comparison shopping—and turning them from opportunists into loyalists.

We need to ensure that we invest and execute around meaningful differentiation. Price competition is not differentiation at all. Anybody can copy a price. Anybody can copy an ad campaign. Strategic differentiation compels buyers to switch and stay for reasons beyond price.

There are three levers to sustainable, meaningful differentiation—innovation, products, and experience.

Innovation is less about what you are going to do, and more about when and how you will do it. Awareness of innovation levers is critical, but not as critical as execution.

In terms of products, tailoring to a buyer's preferences and values is critical. Carriers must move beyond the concept of mass customization to true tailored products and corresponding experiences.

Finally, delivering a superior and consistent customer experience across touchpoints is a critical strategic differentiator. We need to engage consumers not only around the shopping experience, but around claims, endorsement, service—every dimension.

You know what's interesting? As Churchill said, “The longer you can look back, the farther you can look forward.” We need to execute around what agents have done for decades, if not centuries. When customers walked into an agent's office in the 1950s, the agent immediately started trying to answer two questions. First, what experience is the potential buyer expecting? And second, what product or service is required to meet this customer's needs? Successful agents tailored their approach and offerings on a dynamic basis.

As an industry, we need to do what these agents have done seamlessly for decades. However, we need to do it in the context of widely divergent consumer expectations and requirements, and on a 24/7 basis across multiple touchpoints—the agent, the call center, online, maybe even via mail.

This requires an explicit strategic intent, and resource allocation. It's not going to happen by accident.

Embrace Customer Expectations

I would say the insurance industry is incredibly relevant. We make it possible for people to own homes and take risks in their lives, and have comfort in those risks because they're covered for them. So insurance is and will continue to be relevant.

But from a customer-service standpoint, we have to look at the world around us. People's perceptions of service are being framed by things well beyond insurance. We have to embrace those ways that they're being served in other places, and bring those in. Their Amazon experience and their Netflix experience are framing the way they think about service. And they're not going to compare us to other insurance companies; they're going to compare us to other experiences they have.

I think we can compete pretty favorably, when you think about the capabilities we have. I go back to telematics, because as much as you can get out of your shopping experience with Amazon, it's not going to make you a safer driver or tell you who in your family is the best driver, if you want to have a little friendly competition. It's not going to tell you when your young driver is going over 80 miles per hour and being unsafe; it's not going to help you protect your family; and it's not going to help you reduce your rates.

Those are things we can do, and we can really be relevant in that way.

Purpose Over Products

We need to face facts that we sell a product that people really wish they didn't have to buy. It's not about your product, it's about what your product does.

We need to focus on the customer experience. We need to recognize that the insurance product itself isn't that exciting to people. How do we integrate ourselves into their lives where it's not just about insurance? Where it's about helping them accomplish things they want to accomplish in their lives or business?

I listened to a presentation where the speaker said, “It's about purpose, not product.” I thought that was brilliant. We need to do a better job as an industry of relating to our customers and talking to them about purpose instead of just bringing them a product. Because let's face it, it's hard to get excited about insurance products.

Talent and Tech

I think our relevance hinges on two components: talent and technology.

Let's look at technology first. Is it self-evident to say our relevance revolves around technology? Yes, of course, it is. While we can acknowledge this as an obvious statement of fact, taking action is complex.

In spite of the best strategic intentions, the manner in which insurers and reinsurers embrace technology is often thwarted by legacy systems and old habits.

Many of our well-established carriers have been in the business for decades. M&A is increasing the number of large, publicly traded insurers. Purchasing or upgrading systems, hardware and software, and educating a multigenerational workforce about how to maximize these new tools, is costly and labor-intensive for a company of any size, but it's a material consideration for companies being held to quarterly performance metrics.

And given the importance placed on relationships throughout the industry's distribution channels, an increasing focus on data-driven operations can lead to a culture clash where the traditional ways of doing business are mightily resistant to change. This dynamic is symptomatic of a general complacency that's plagued our industry for years.

However, as emerging risks like climate change and cyber continue to evolve in real time, and as, increasingly, a premium is placed on the ability to gather and analyze data (also in real time), there's no room for complacency—not if we want to stay relevant, let alone increase our relevance. Systemic, organizational and operational changes are required.

And to unlock the value in technology and effectively respond to a world of new risks, we need the right talent.

Again, an obvious statement of fact, but one made against the backdrop of an industry that continues to grapple with an image problem and a talent crisis.

Few high school and undergrad students give insurance a second thought as a compelling career choice. Many look at the demographics of our sector and don't see themselves reflected. They also pigeonhole the industry as boring and conservative.

If we're talking about what makes us relevant, it's presenting opportunities to young people that resonate with their sense of self and their generational need for a sense of purpose. It's establishing work environments that genuinely and authentically acknowledge and welcome the diversity of the world we live in.

The irony is that solving the talent riddle is likely to address the challenges related to technology. The digital natives entering the workforce will have the skills we need to provide products and services that are relevant to the digital world. It's one they were born into, and one they understand well.

I don't think this is a chicken/egg equation. It's more a “build it and they will come” proposition: Offer a compelling reason to be part of an industry in flux to the right talent, and informed, astute choices will be made about what's needed to get the data-driven job done.