Max Tiong, Head of Digital Transformation, NTUC Income
Consumer expectations, driven by technology, social change and the pandemic, are continuing to evolve. Increasingly, customers expect convenience, an intuitive way to buy and a seamless journey, irrespective of the communication channels they have used.
To meet these changing expectations, businesses need to innovate constantly. This is as true of insurance as it is of any business sector.
Max Tiong, Vice President of Digital Transformation at Singapore-based composite insurance company, NTUC Income, believes the only way to innovate successfully is to take a customer-centric approach. “What kind of products can we create to embed ourselves within our customers’ lifestyles?” he asks. “Could we become a Netflix for insurance? What can we learn from Apple Pay or Amazon Prime to help us capture the Gen Z market?”
The Generation Z market is an important one. Comprising around two billion people globally (more than one in four of the world’s population), it’s a huge opportunity for the insurance industry to focus on. Insurance is a lifetime investment, Tiong adds, and creating brand loyalty early (Gen Zs are under 25) can increase the lifetime value of insurance to a person by two to four times.
But this is an extremely demanding, tech-savvy demographic. Innovation is crucial for companies that want to succeed and grow alongside it.
Innovating the insurance market
Innovation means creating new experiences that create a competitive difference. But doing this is risky and expensive. Not all innovations succeed commercially. And the process of developing and testing new products and services is costly, whether or not they succeed.
However, when innovations do succeed, the payback can be huge.
Keeping the focus on customer experience is the most important way of reducing risk, says Tiong. “Whatever the product, improvement is always possible. There is always an experience that customers will be better attuned to.”
And this is true, regardless of the customer segment. Constantly testing new ideas on different customer segments allows more relevant and desirable products to be developed.
But customer-centricity needs to go beyond the product. Organisations need to examine how different marketing channels work together to build a positive brand experience. And they need to focus on how the product is delivered to customers and how it will be used by them. Optimising the end-to-end customer experience is essential.
The key to this is using data to build up a detailed understanding of an individual lifestyle, whether that of a parent, retiree, delivery driver or gigging musician. Data points from a customer’s lifestyle can inform us about their pain points, needs and preferences, and leveraging such insights for potential product and service innovations is a huge opportunity. For example, everyone has different insurance and financial planning requirements. But if we look at our society, which is increasingly becoming digital-first, customers generally display similarities – they often use smartphones and digital payments and demand high levels of online services.
The lifestyles of different customer segments can underpin the development of many new ideas in the insurance industry such as micro-policies, usage-based and subscription-based insurance. NTUC Income has used data on these lifestyles to develop several such innovative new insurance business models.
One example is SNACK, a novel insurance proposition designed for digital-savvy consumers that offers protection via stackable micro-policies based on flexible micro-premiums. It is built into people’s lifestyles, allowing consumers to build or stack insurance coverage linked to their daily activities such as taking public transport, dining out, or going for a jog and paying as little premium as S$0.30 when each lifestyle activity is completed. An attractive proposition for segments such as Gen Z and first jobbers as they can easily get on board to plug their protection gaps without heavy financial commitments.
An extension of SNACK is SNACKUP. Transact with merchants that partner SNACKUP and you get insurance coverage for free, contributed by the merchants. For example, when customers order food via foodpanda in Singapore, foodpanda rewards them with a free $100 of insurance coverage, via the SNACK app. From the merchant’s perspective, offering customers insurance coverage is a refreshing way to reward customer for their loyalty, whereas, for NTUC Income, it is reimaging the way it extends insurance access to society. These insurance coverage can accumulate over time to provide substantial coverage to customers.
For motor-car drivers, NTUC Income has introduced “Milesurance”, pay-as-you-drive car insurance where mileage is taken into consideration when ascertaining premiums using telematics and data analysis. This usage-based insurance model resonates with customers who are increasingly looking to lower their carbon footprint by driving less, working more from home due to the pandemic, or who are gig workers.
Another innovative solution is TRIBE, a flexible subscription-based insurance model where customers pay a fixed small monthly fee for the insurance plan they select and have the flexibility to adjust as needed, depending on their life stage. For example, a mother purchases a Child pack which comes with two insurance plans for S$5 a month – the Child Illness Plan, which covers infectious diseases, food poisoning, and allergies, and the Child Injury Plan, which covers accidents and injuries. When the child is in nursery, the mother can increase the child’s coverage on the Child Illness Plan as they may be more susceptible to infectious diseases. When the child starts school and is more active in sports, the mother can increase coverage on the Child Injury Plan, and reduce child illness coverage, all kept within the same budget of S$5 a month.
The future of insurance
One thing is certain about the insurance market-change is here to stay. New technologies are emerging that will continue to promote innovation. Big data analysis, artificial intelligence, blockchain – all these will be the drivers of new lifestyles and also of new insurance products and services.
As consumer needs evolve, so must insurers evolve in how they engage with customers – not just in terms of product offerings but also channels and touch-points, online and offline, as well as the experience that comes with them.
By responding to constant change, insurance companies that put customer lifestyles and needs at the core of innovation will always be able to deliver products relevant to different customer segments, as well as services and experiences that delight them.
Click here for more www.income.com.sg