Making good use of a crisis: Turning challenges into opportunities
Someone once said never let a good crisis go to waste. Back in March I wrote a letter to our clients in which I predicted that this unprecedented time of disruption and economic recession would actually yield many positive outcomes. I suggested we take this time to look at our value chain and value proposition from different perspectives – to examine, to question, and to plant the seeds for accelerated innovation.
Perhaps the most important takeaway is that the pandemic will speed up the changes we’re already experiencing. Change requires a sense of urgency, something we’re seeing in great supply right now. And what’s more urgent than life or death? The threat of COVID-19 has forced us to confront our own mortality. Who among us hasn’t thought, “What would my family do if I were to suddenly die?” “Would they have what they need?” We have all become more aware of the need for financial protection.
So you’d think the decision to purchase life insurance would be a logical and objective one. But in fact it’s very subjective. Each of us has cognitive biases that prevent us from taking the long-term view or using a cost-benefit approach to make decisions. Like, “How do I feel right now?” “What are my friends doing?” Or, “Is my bank balance just hovering above empty?” Those fleeting impulses can short-circuit and even derail a rational thought process.
Nothing has enabled our short attention span more than our device (e.g. phone), which is essentially our window on the outside world. Professor Byron Reeves and his team at the Screenomics Lab at Stanford University are studying personal online habits during the pandemic. He says, “more and more of life is now being ‘mediatized.’ Everything you do now goes through the phone,” from your home irrigation system to scheduling soccer practice.
Screen time has surged during the pandemic, and with eyes rocketing between images and brains attempting to process sentence fragments, insurers need to meet consumers where they live. We need to “unlearn” many of our traditional ways of doing things, set aside assumptions and adopt fresh and relevant ways of doing business in the era of the digital consumer.
There are early indications that the pandemic is accelerating the use of digital services for insurance, according to a new Swiss Re survey of US consumers:
- Nearly two-thirds already communicate with their financial service providers by email or other digital channels and 60% say they’re more open to completing financial transactions online
- 28% of the respondents have tried telemedicine for the first time since the pandemic and 65% will continue to use this service
- 6% of people surveyed bought insurance during the pandemic, and 58% of those had actually experienced at least a slight dip in income
- Most of those new policyholders bought their policies online and would do it that way again, while also getting some advice
- When asked how COVID-19 will change the way they might buy life insurance in the future, 37% said they are more likely to purchase insurance online and 15% said they will continue to buy online. That’s over half who are ready to buy online. That’s the digital consumer.
September is Life Insurance Awareness Month, a good time to remember that our goal is to help people live longer, healthier lives. And to that end, we, as an industry, will redouble our efforts to help the customer become the CEO of his or her own health with things like more robust monitoring and incentives. Life insurer wellness programs will continue to evolve to provide customers with the opportunity to better understand how things like fitness and lifestyle habits impact their overall health.
Nearly half of Americans are uninsured and many more do not have enough coverage. The protection gap in the US stands at $25 trillion and that gap exists in part because of another gap: the one between what we offer and what customers expect. Sentiment is changing, however. In July LIMRA reported that 58% of consumers are more aware of the need for adequate life insurance coverage, up 9 points since its initial survey in March.
Perhaps this is a signal that we need to accept that we will never go back to doing things the old way. We have before us an unprecedented opportunity to become a true partner with our customers and to closing the gap by making life insurance as immediate and as simple as possible.