The previous article illustrates the need to tailor the ‘underwriting mix’ to the rest of the marketing mix in order to create both an appealing customer proposition (and traditionally an appealing producer/broker proposition too) and a profitable source of revenue for the carrier. In the past, generally one underwriting mix would do – products were sold via intermediaries and there was seen to be little need to vary product design or processes between agent and broker channels.
Today, though, it’s a whole different ball game. Direct-to-consumer (DTC) offers are more common. The Internet has revolutionized communicating and transacting. There is a strong trend towards using underwriting engines. There are new sources of risk information, such as prescription and lab test databases. And marketing has got much more sophisticated, with better customer segmentation (although relatively speaking almost all insurers are lousy at understanding consumer needs, wants and behaviour), recognition of the implications of the various channels and more tailored consumer propositions. And let us not forget predictive modelling – the application of external data as proxies for customer profile, behaviour and mortality/morbidity risk.
Recognition of this new world is especially important in the context of underwriting engines, which carriers are now looking to apply to more than just straightforward simplified-issue business. These tools represent the future and especially they feature in the processing of business generated by innovative propositions. And the flexibility of an engine allows the carrier easily to vary key components of the underwriting mix. Engines can be programmed with multiple rule-sets to deal with multiple offers available via multiple channels. Preferred product distributed by brokers? Detailed app with commensurate supporting rules. Preferred product via a bank/agency channel? Lighter-touch underwriting rules based on a slightly shorter app maybe. Simplified-issue mass-market product offered DTC? Simplified underwriting rules. Purpose-designed product offered to a well defined target group? Different app and different rules again.
And it’s as well to remember that e-transacting should not involve using the old paper forms converted to electronic format. Digital, particularly in the DTC environment, has so much more scope than paper for stimulating and surprising the customer, turning completing an app from a chore into an experience. OK, let’s not get carried away with the idea that applying for insurance can be fun, but given the importance of this initial interaction between customer and supplier in the formation of a relationship, getting it right and making it different is crucial. Think about the language. Think about the layout. Think about supporting information and help buttons. Think about the order of questions for a natural, logical flow for the customer. Think about how Rx and lab test databases could make some of the traditional questions redundant.
When contributing to the design of your company’s new propositions, be prepared throw away a lot of tradition. The world is moving on, and fast. Time to go with it.
