Insurance Innovation (Promises…promises)
Whilst it has been said that “Insurance Innovation” is an oxymoron the australian insurance industry has been proving this wrong with lively contributions from regular attendee’s at SAP’s Executive Innovation lunch series.
The first session in May looked at how business analytics can bring clarity for insurers to assist in surviving the immediate economic conditions, highlighting areas to reduce cost, improve efficiency and effectiveness as well as release much needed working capital.
We then had an open industry session discussing how identifying value can allow companies to invest in initiatives that position them to accelerate out of the curve, identifying the processes that deliver competitive advantage.
Last weeks topic conclude this series by looking at how insurers can build businesses that are sustainable, by being able to cope with changes in customer demands and by consistently delivering on promises.
One of the most significant effects of the GFC has been a reduction in consumer trust in financial services organisations and their leaders (refer to excerpt from the Harvard Business Review article “The 10 trends you have to watch” July – August 2009 ). Reg Price, a recognised international thought leader on improving customer relationships, introduced two new words to look out for when trying to improve reliability and consistently meet customer expectations:
Promise-scuity (adapted from promiscuity)- the act of promising anything to anybody to get in bed with them for short term gratification
Consist-apation (adapted from constipation)- the invisible blockages in your firm’s elementary canal caused by poor consistency/ reliability.
He identified a number of promises management challenges that insurance executives need to look out for including:
Bad promising leads to most problems in business relationships, not poor performance.
The wow myth: People hate surprises. They really hate negative surprises and contrary to popular opinion people even feel uncomfortable with positive surprises- commonly called delighting or wowing them… exceeding their expectations is not always a good thing.
Inertia in insurance: Don’t let sleeping dogs lie, if you don’t wake your customers up to a better deal then your competitors will.
Reliabile people are up front and tough minded: To reliably keep promises you need to not only be clear on expectations but it also means spelling out in plain terms what you are not prepared to do.
Small gains in reliability can lead to significant gains to productivity.
I thouroughly recommend Reg’s book “Reliability Rules” for all businessess, but for Insurance who’s business exists on the selling of a promise, it’s very relevant.