“The market is changing,” noted AXA Partners’ Kelly Ward (pictured) during a recent discussion with Insurance Business, and insurance needs to accept that it doesn’t have a divine right to transact differently from other sectors. Changing consumer behaviours, demographics and attitudes are reaching a critical-mass moment at the same time that innovations in other industries, such as retail and banking, are setting a new normal for customer service.
“What sets insurance apart from other sectors is the level of legacy that we’ve got in the industry,” highlighted Ward who is AXA Partners’ chief sales & distribution officer. “Imagine starting a race where you’re 100 metres behind the start line and someone says ‘right, go!’ But I think we probably are up for the challenge and one of the benefits of COVID was that it pushed the industry a couple of years in advance.
“So, we were 100 metres back, but COVID took us to 50. And there are some really good digital changes that are happening in the market, so I do think we are up for the challenge.”
What the sector needs to embrace, according to Ward, is exploring how customer needs have changed and reforming products to meet these new requirements. Innovative products like By Miles that allow a plug-and-play approach to car insurance are a great example of that, he said, because they tap into what people now want from their insurance rather than trying to retro-fit an existing solution.
The link between innovation and brand loyalty is essential to understand, he said, as it exemplifies how attitudes to brands have changed in recent years. Going back generationally, children would typically bank with the same financial institution as their parents and grandparents. Now the market has been completely shaken up by the likes of Monzo, Revolut and other fintechs.
“It might be a bit controversial but in terms of brand loyalty, I just don’t think it exists anymore, not in the same way that it did,” Ward said. “Because I do think that, historically, you would be given something of a free pass if you did something wrong with your brand. Your brand would be strong enough that customers would say ‘they’ve been good to me for years, I’ll give them this one.’ I don’t think that’s there anymore, now it’s one strike and you’re out.”
What innovation is about is not one journey or one transaction, he said, but rather the series of micro-experiences customers have as they go through that purchasing journey. Consumers used to think about how to buy insurance, now they’re thinking about the way the product is presented to them, how easy it was to make that purchase, what payment methods they were offered, etc.
All of those things now make up the customer experience, Ward said, and brand loyalty is made up of the customer’s perception of how their experience of a product or service matches up with the best in the market. Therefore, what insurance businesses need to get right is their understanding of their customers’ needs and wants, as well as how they want to be reached.
“We’ve got a particular product called Home Emergency [for] customers at a point of distress in the claims process,” he said. “The typical demographic would be between 50 to 80 years old, and we wrongly assumed that this age group – because ultimately a number of them never grew with technology – wouldn’t [adapt] to the technology which we presented to them.
“But we’re getting up to 30% to 40% digital adoption on a claim in that age group. I don’t think that was there even two or three years ago. That level of digital penetration is happening as a result of the simplification that is making it easier for those who didn’t grow up with such technology. Millennials and other generations do this with their eyes closed, of course, but businesses are now realising they can simplify the digital process even for those less digitally capable.”
As somebody passionate about driving innovation across his own team, Ward has some solid, proven advice for brokers looking to embrace new opportunities and his first message is that of its necessity. If brokers don’t seize opportunities for innovation, he said, then they need to accept that the pool they are fishing in is only going to get smaller and smaller. It’s as simple as that.
“To get started, the first thing is to be curious, because that’s where most of your development and understanding comes from,” he said. “But also, don’t be too ambitious. There can’t be the perception that we need to ‘swallow an elephant’, it needs to be done in bite-sized chunks - those niche improvements that the customers will notice.
“And they do notice even the smallest things [particularly once you’ve delivered] a group of small things. And the final thing I’d say is to never rest on your laurels and not to be complacent. Complacency, I think, is probably the biggest risk in our industry… but when the market is changing, it’s an opportunity to really make your stand. Don’t be afraid of it, embrace it and you will grow.”