The concept of insurance has stayed static for decades.
Famously sold and never bought, the industry has been challenged on the growth front, despite being a logical no-brainer.
When you look at how insurance is consumed in this country, one’s first interaction is probably at work, where employee benefits call for some level of cover, recently boosted by the government drive with the National Health Insurance Fund to onboard the self-employed; and when buying a vehicle for which insurance is a legal requirement.
On the latter if it was not required by law to take out a policy, a large percentage of asset owners would err on faith for protection.
Unfortunately logic is a bad crutch to lean on as consumers are quick to justify the illogical when asked.
In what would present a business development quagmire, insurance should frown on leads that proactively seek cover as this behaviour may be informed by a risk profile that could remain hidden, known only to the eventual principal.
The fact that many consumers often feel short- changed by the industry in a relationship viewed as one-sided, the predisposition is to embellish claims and “get out what you can” from the perceived deep pockets of the insurer.
Let us not even get started with the millennials who feel immortal and have no sensitivities for any downside, with robust health and a runway of years to live it up before settling and “adulting”.
At it’s core insurance is about three Ps — profiling, pooling and pricing.
Profiling is a function of access to data. It is understandable that in years past, getting good quality data was difficult and expensive but today our interaction with sensors that capture and transmit data in real-time has changed that.
Pooling allows for the creation of consumer clusters that have similar attributes and would inform a differentiated product mix or risk segment.
Previously the lack of data led to the use of much broader classification criteria. Pricing in my opinion is synonymous with access; on a well thought out product this makes the home run.
With risk arguably at an all-time high and platforms that supercharge the three Ps readily available, the missing link is that of distribution.
The only way to get to scale would be to embed bespoke products into everyday living, a task that will take a fresh pair of eyes to figure out execution.