INSURETECH CONNECT: INSURANCE INDUSTRY NEEDS TO UNDERSTAND WHAT BUSINESS IT’S IN

LAS VEGAS — People who buy gasoline generally don’t care for the product or enjoy the experience of pumping gas: They just want to drive.

Chris Colborn, chief experience officer for the Lippincott creative consulting firm, opened with that analogy during a keynote presentation Tuesday at the InsureTech Connect conference. He said the insurance industry should be in its heyday with rising perils such as global warming and cyber risks, but the industry needs to understand what business it’s in.

“No one wants a quarter-inch drill bit,” he said. “They want a quarter-inch hole.”

Colborn said a French tire manufacturer recognized how to build demand for an experience as a means of selling a product in 1900 and launched the Michelin Guides to rate restaurants in the Paris area. There were only 3,000 motor cars in all of France at the time.

He said the insurance industry needs to think in the same manner about what customers actually want when they purchase a policy. He said by its very nature, the product of insurance creates a disincentive to buy: From the customer’s point of view, it’s a no-win situation. Only the insurance carrier wins if no claim if filed.

Technology holds the means for insurers to better connect with customers and more quickly meet their needs, Colburn said. He noted how a United Kingdom homeowners insurer, Neos, markets itself as a smart home product provider: It doesn’t just promise to pay for repairs, it prevents damage by installing sensors to detect water leaks or fires.

Similarly, there are life insurance products on the market today that award policyholders “mindfulness points” if they take measurable steps to protect their health.

“The goal here is to align your interests very closely with your customers,” Colburn said…

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