One of the historic mantras for insurance companies has been to drive toward optimization of efforts around what are typically the low(est) cost options. The focus on annual budgets, conservative management practices, reliance on history as a predictive variable for understanding the future and a steadfast reliance on business cases focused on the ROI metric, have all contributed to this outcome. And while this enumerated list of practices may be important to consider as part of a broader discussion of priorities and alternatives, reliance on them alone can be unfortunate, to say the least. Consider the examples of Netflix and Blockbuster. Facing an uncertain future, one focused on diversified approaches to addressing customer needs and one focused on a “one size fits all” model. One thrived and one failed in an epic plummet for the ages. The “one size” model was highly profitable until it wasn’t and, by then, there was no road to redemption. For insurance carriers, as if this wasn’t bad enough, there’s a magnifying problem. Most are introspective and rely on management decisions made looking from the inside out. Unlike banks, who zealously pursue external views through a variety of tools like focus groups and secret shoppers, carriers focus far too much on the internalized view of the world. Introspection and a “one size fits all” game plan is increasingly problematic in a world characterized by high-speed change. Demographics, regulatory changes, technical advances and the introduction of disruptive forces make this a very exciting time to be sure. But whether that’s good or bad for a carrier may be deeply dependent on their willingness to do the unthinkable and accept a new maxim: “One Size Fits None.” And the alternative may maximize short-term profitability at the expense of long-term viability. I recently noted a fascinating reflection of this in my own wardrobe. As a middle of the cohort Baby Boomer who is an advanced user of technology, I’m reflective of a “Tale of Two Wrists.” On my right arm, I wear a 1958 Hamilton gold watch that was my grandfather’s gift for 25 years’ service at an engineering firm. On my left, I wear a Fitbit. When my adult Millennial children spotted the watch, they were most curious about my need to “wind” it. That level of effort for so little returned value seemed silly. But of course I wear it for sentimental purposes, not because of a commitment to doing things the old fashioned way. The Fitbit may be better at telling time and is certainly more functional. And of course that sentiment is more in keeping with how a different generation reacts to a choice between those two devices. Which then gets back to consumer preferences and carriers models. Some customers may want paper based processes and documents of record. They may also want to talk to someone by phone. Conversely, others will find web based portals and mobile apps to be a more logical and satisfying approach, certainly more consistent with other aspects of their life. For this cohort of producers or consumers, the lack of capabilities may be the equivalent of winding the watch. They will get it and do it, but only until there’s an alternative that makes more sense. The costs associated with moving from one carrier to another are ever declining. This concern about “One Size Fits All” may actually be more problematic with the producer community than it is with end customers. Curiously, for many carriers, they face a notable conundrum: While their current sales organizations may well be highly productive, they are also aging faster than the general population at large. As a result, they may find themselves facing a complacency related to current productivity levels which mask a reality that there’s a significant transition to a new generation of producer coming in the near future, which they are not prepared to recruit or retain. That should be a sobering thought. Further complicating all of this is the reality that many carriers that do have some form of agency council, frequently populate these groups with top-producing agents. While that might normally make a certain amount of sense, if “productive” is correlated with age or duration in the business, the messages they receive may be totally focused on one generation of the sales organization, making it tone deaf to the needs of others. In order to address this gap, carriers need to split their attention and concurrently address the needs of both groups. Failing to do so by focusing on a “One Size” model creates a potentially untenable risk. Breaking out of the complacency associated with ignoring mechanisms for gathering real insights from externalized customers is also key to preparing for both a multi-dimensioned and an omni-channel future. Whether it is determining how a carrier can stand out in a commoditized pack, understanding what the next best offer should be, or how to retain at risk business, carriers need to get better at exploring the varying needs of different types of customer and responding appropriately.
