WE ARE ALL MADE OF STARS?
I was taking part in a panel discussion at a conference last week delving into “data driven personalisation in insurance” (perhaps more to come on that later, for the most eager readers…) and, as is often the case, it’s the un-planned, throw away comment that garners the greatest attention. Conversation had turned to consumer choice, and whether it is necessary to ‘educate’ a customer such that they can make an informed purchase. Do customers want to be educated when it comes to insurance?
Those of us who inhabit the insurance industry and devote to it our daily, and often nightly, thoughts might like to think that there is a public just clamouring to learn more about what we do and how it can benefit them. I love to think that our customers gasp with audible joy at the flexibility and transparency of Zing’s innovative, modular product structure. But let’s face it, such hopes end in delusion and, if we’re not careful, despair. Does the average customer care more about a promise of the cheapest price than whether the core product they’re purchasing, which is a promise that if something bad happens to their important possessions they can rest assured that they can have it put right, actually does what it says on the tin?
“DO CUSTOMERS WANT TO BE EDUCATED WHEN IT COMES TO INSURANCE?”
Well, yes and no. As is often the case, it comes down to how we frame the question. If asked whether they’d like product A for £25 per month or product B for £28 per month, many would probably go for product A. However, if there was the option of a crystal ball to predict, on a scale of 1 to 10, how happy they would be with the claims service, when and if the dreaded moment comes to actually use the product, would that £3 per month make such a difference in swaying a decision? I’m not suggesting for a moment that some insurers have differing priorities when it comes to positive claims outcomes for customers (we might drift into a ‘consumer duty’ discussion there, and that’s definitely one for the most eager of readers). The point I’m making is that not all people are the same and not all insurance products are the same. Product A might produce a great claims outcome for person Z, but might leave person Y as incandescent with rage as they are out of pocket.
DEFAQTO VS TRIP ADVISOR
Which all, eventually, leads back to my throw away comment at an insurtech conference. A perfectly valid and astute reference was made by one of my fellow panellists to Defaqto star ratings. I, somewhat flippantly, as is all too often my wont, compared Defaqto star ratings, those five or fewer stars displayed next to many insurance products, to Trip Advisor reviews, those five or fewer little green dots displayed next to restaurants and hotels and such like on the popular booking site. Cue a flurry of comments, LinkedIn messages and emails variously correcting me, agreeing with me, commending me or upbraiding me for my wilful ignorance (maybe it’s not just the customer who needs ‘educating’). It’s moments such as these that make me thankful not to be a Twitter user.
The criticisms are perfectly fair. Defaqto star ratings are really nothing like Trip Advisor scores. The latter are amalgamations of individual feedback, provided after an experience of the business being reviewed (in theory at least). People are more motivated to leave a review of a brilliant or terrible experience, than just of a ‘perfectly good for the money’ type experience. The former, by contrast, are ratings compiled by insurance experts after consultation with the industry and an analysis of claims to work out what features and benefits are likely to be of the greatest importance to the greatest number of customers.
LASAGNE VS INSALATA DI MUSSO…
So was I just being entirely flippant and wilfully ignorant? Well, I hope not entirely. The problem I have with Trip Advisor points is that I have no idea how much I have in common, or at variance, with those doing the scoring. If I look for an Italian restaurant because I have in mind that I really want a lasagne, and instead I’m confronted by a menu offering insalata di musso (descriptions available on Google), I might reach instantly for a single green dot of dissatisfaction. Others will be delighted at the same restaurant’s authenticity and regionality and will award it five green dots of delight. The same might well be true of insurance star ratings. The provision of ‘hole in one cover’ (yes, some household insurers really do, as standard, cover you for the cost of a round of drinks at your golf club after a particularly successful performance) might be important to an avid golfer but would be a total irrelevance to a non-golfer like me. Yet if that same policy put a limitation on how much they’d pay out if one of my watches were stolen whilst on holiday, that would be a big problem. Does five out of five stars mean that the product I’m considering buying is going to give me a menu that includes both lasagne and insalata di muso, and if the menu’s that big and varied then can it really do equal justice to both dishes? How does my insurer know whether I’m a golfer or a watch wearer or both or neither?
Now if the insurance industry encouraged consumers to do their own research and provided tools with which consumers might ‘educate’ themselves about insurance that might help. But I think (and I’m as subjective as a Trip Advisor score) that most people put more research into planning their restaurant visits with friends than they do into their choice of insurance product. So how, in a ‘non-advised’ insurance market, do we achieve personalisation?
AND SO TO PERSONALISATION IN INSURANCE
Fortunately, there were lots of different views on this at the aforementioned conference. Lots of ideas and lots of variance is good because it provides consumer choice and those that are liked by the most people will succeed in the short term and continue to get better in the long term. At Zing we believe that better and more meaningful relationships with non-insurance, consumer-serving industries is a good place to start. If my biggest worry is what happens if my prized watch goes walkabout while I’m on holiday, then a pretty good place to start would be an insurer with good links into the watch industry. If my insurer has good links with watch retailers, they’re probably better positioned to mitigate the risks of me being under-insured (the perennial problem of one’s insurance not being sufficient to replace the item appropriately following a loss), and if I need to claim then I’m more likely to be speaking to a claims advisor who has access to expertise on the watch market and therefore better positioned to satisfactorily resolve my claim. There’s also a ‘halo effect’ that benefits consumers: is a watch retailer that cares about their brand reputation really going to associate with an insurer offering cover that’s not really relevant to watch enthusiasts?
The same can be true of any consumer product, even golf paraphernalia. Businesses that sell products to customers have a view of the needs of those customers, their likely use of the product and what motivates their choice of brand and retailer that insurers all too often lack. Better partnerships between those businesses and insurers is likely to result in better insurance products and better service and outcomes for those customers. Sometimes insurers need to better educate themselves about their customers, rather than vice versa.
MOBY VS BOWIE
So are Defaqto ratings like Trip Advisor scores? Of course they’re not. If I want a means of comparing the relative merits of broadly similar insurance products then their respective star ratings are a pretty good place to start and the very existence of star ratings generally helps to hold businesses to account and to drive up standards. But if I want something that’s more personalised to me, then it can only be a good thing that insurers such as Zing are looking at ways of achieving that by looking beyond the confines of ‘insurance industry best practice’ and instead looking at the retailers and brands with which I associate.
Even the attempt at a catchy headline for this blog post is a form of personalisation. I went for a Moby reference (for all those that didn’t get it). That says something about me. I could have gone for ‘reach for the stars’ (S Club 7), ‘in the gutter, but looking at the stars (misquotation of Oscar Wilde), ‘stars in their eyes’ (ITV amongst others) or ‘there’s a star man…’ (David Bowie). All of these would have been a personalisation that may have attracted, perhaps, a different readership.