Insurers must make a drastic shift in their propositions or risk a fatal step towards obsolescence. This was the stark warning of MLC Life’s chief customer experience officer, Louise Portelli, addressing delegates at the Future of Insurance.
There is, Portelli contends, too much navel-gazing within the industry. Insurers are in large part failing to account for ‘big picture’ disruptions (the Covid-19 outbreak, for instance, proving itself a manifest long-term threat that must be immediately addressed) that directly impact the dynamic and ever-changing risk profile of customers.
“You’ve really got to think bigger about the sort of risks you’re mitigating against, from a disruption perspective. Business often isn’t very good at thinking about geopolitical impacts or large-scale regulatory impacts, or really thinking through what technology will do to propositions and the expectations of customers in 10 years’ time. [They’re] all thinking very here and now.”
For Portelli, the Hayne Royal Commission served as a potent wake-up call for the industry, exposing the growing gap between the interests of insurers and their customers. A lack of clarity in product offerings, moreover, has served to exacerbate the trust deficit.
“Customers cannot trust you if they’re not clear about your products. If products are too complicated, they don’t trust the channels they’re buying through,” Portelli said.
“If we’re not convinced after the last 18 months that there is going to need to be a significant shift in the propositions of insurance, we probably never will be.”
While technology can serve as a bridge to help reconnect customers with their insurers, simply patching over cracks in the cultural foundation of the business with a flashy digital overlay will do nothing to restore the trust in your brand.
“You can have all the bells and whistles, but if the trust is broken the bells and whistles won’t get you anywhere. The trust is fundamental. That’s what the research shows.”
Regaining trust is not only fundamentally tied to insurers’ ability to anticipate customers’ needs, she contends, but also where insurers’ propositions are dynamic enough to shift and cater for customers’ changing risk profile.
Any technology adoption, from a customer’s perspective, should always serve to simplify, augment trust, account for changing risk profiles, and add value to any interaction – “from the time the purchase to the time they claim to the time they cancel,” she said.
Simplicity, ultimately, may prove the saving grace for insurers. For Portelli, this may even be taken to its logical extreme where “products are so simple, from a customer perspective, that in fact there is only one product dealing with a complex arrangement of risks for the individual”.
A journey in Life
Three years since its acquisition by Nippon Life, a Japanese insurance giant (and, rather uniquely for a multinational insurer, a mutual), MLC Life has taken on a rather stark cultural transition.
“A mutual has a very different ethos; customer fairness and equity are core to their ethos and that’s been something we’ve really embraced at MLC Life.
“It’s really helping us drive that culture change that, again, really drives how you use the technology and how you change your proposition going forward.”
However, while it may have the independence and “vision of a startup”, MLC Life has still had to contend with the burdens of its NAB-era legacy infrastructure.
“Your challenge is to embrace the mentality of a startup while you’re still dealing with the spaghetti that many of us deal with every when you have legacy infrastructure. You’re transitioning that legacy infrastructure into a brand spanking new platform that’s going to change the life of your partners and your customers going forward.”
“That is a that is a transition that takes some time.”
Yet, Portelli urges established to be wary of throwing the proverbial baby (or, perhaps more aptly senior citizen) of heritage out with the bathwater.
“Really established insurance brands… want to hold on to their history and celebrate that history – you don’t want to let that go altogether. It’s about choosing what you’re holding onto and what you’re celebrating, and about balancing what you’re trying to reshape and how you’re trying to be reborn.”
The next 12 months will be a “juggling act” for MLC as it seeks to strike a balance between its customer experience agenda and its regulatory agenda, Portelli acknowledged.
“When you’re complying with the regulator and you’re trying to innovate and really change the proposition at the same time, that’s a big job.
“Balancing the spend that comes with it is key for us.”