Consumers are becoming increasingly knowledgeable and engaged with technology. They are becoming more and more comfortable with researching and purchasing on-line. Just as retailers are working hard to make their technological interaction with customers more productive, insurers should do the same.
Gamification is the use of game elements and design techniques for non-game-type problems. The theory goes that by using elements used in designing games, activities that might normally be dull and unexciting can be brought to life and become more engaging. It has become increasingly common in consumer culture and is used in many industries to increase customer engagement and loyalty. The methodology is not just limited to IT system design but can also be used to review and change business processes in organisations.
There are many examples of how these techniques can be used but some of the most visible are rewards programs used by firms to promote loyalty. Frequent flyer programs track customer behaviour and activity, with rewards granted either by loyalty points or air miles or by increasing the status of the customer in the airline’s loyalty programme. Coffee shop chains have also been using the principle for years with simple loyalty cards, apps and ‘gamified’ social media applications.
Closer to home the same principles have been used for some years in on-line learning programmes to give awards, sometimes virtual, to users who complete modules or attain good grades or pass marks.
You might be forgiven for thinking ‘So what’s this got to do with insurance and underwriting?’ but insurers are already using the principles of gamification. Humana, a health insurance provider, uses X Box Kinect to train people in aspects of physical fitness (obviously it benefits a health insurer to keep policyholders fit and well). Farmers Insurance has been involved in FarmVille and CityVille, and Axa Equitable Life has Pass It On!.
In various markets in Europe, Asia and North America insurers have adopted the Vitality programme, developed by Discovery Life in South Africa, which gives policyholders rewards and even premium discounts for engaging in healthy activities such as exercising at the gym and attending health screens.
Gamification principles can also extend into designing the customer journey for the insurance application process. Some insurers have a complex and user-unfriendly application process which appears to have been designed by the compliance department, whereas others look to engage with their customers and make it easy (and almost fun – though that might be stretching it a bit) to do business with them. These application processes have been thought through using a customer’s eyes, have uncluttered screens and use sliders and visual aids to guide the applicant.
Even something as simple as a progress bar indicating that ‘you are nearly done’ may ensure applicants see the process through to the end. With completion rates for on-line journeys often dismally low, increased engagement can only be a good thing. On-line help can be used to guide consumers in completing their application. Usually this is in the form of context-sensitive text or pop-ups, but it could easily take the form of a virtual assistant or an avatar-based approach. Many sites already use on-line chat and some consumers may want to start the application process on-line and then complete over the telephone.
These methods can be applied to the application process and provide an intuitive needs analysis beforehand. One example of this is Sureify which uses an interactive site to engage with potential life insurance purchasers before they contact an insurance agent. The four-stage process of learn, estimate, compare and ‘download my plan’ ends with suggested carriers and agents.
The design principles can also be applied when thinking about risk factors. In a non-life context the impact of providing answers to questions like ‘Do you have a smoke alarm?’ or ‘Is the vehicle garaged overnight?’ can be demonstrated via the resulting premium discounts. Perhaps the same could be used for life and health contracts. Some inside the industry would argue that this provides too much transparency to consumers, but then lack of transparency in terms of process, risk assessment, product features and the provision of financial advice should be wider concerns for an industry struggling to maintain the trust of consumers.
There is also an opportunity to apply these principles to enable more personalised and flexible products. And maybe more personalised pricing too. The use of telematics in motor insurance is an obvious application of a number of new ways of thinking (including gamification, big data and predictive analytics). Life and health insurance cannot afford to be far behind, especially as individuals become more technology-savvy and increasingly aware of their own health issues and risks.