Transforming life insurance with design thinking – McKinsey Report
Article Synopsis :
Over the last fifty years the promise of financial security powered by strong actuarial teams with minimal investments in customer experience has been a winning formula for life insurers. But today’s insurance buyer insists on simplified and compelling product design, a streamlined cost proposition and a delightful customer journey.
“Charting a path to customer centricity; How design thinking can transform life insurance” from McKinsey focuses on “delightful customer journeys” in particular. Their proposed “design thinking” approach connects every aspect of the business, from marketing to distribution, underwriting, and claims.
The ultimate goal, per the report, is to eliminate business leakage drivers along the customer journey, idenitified as follows:
“Design thinking” goes beyond the traditional mantra of customer centricity and aims to change not only a company’s processes but also its people, as follows:
- Instill True Customer Empathy: Not only what they want but why. The ability to target the underlying needs of customers and not just the stated ones. This typically requires organizational transformation (e.g., hassle-free call center interactions, one person handling inquiries instead of several hand-offs).
- Get comfortable with the iterative approach: Think about delivering the “minimum viable product” and gradually improving it; not waiting for the perfect product. Insist on product cycles measured in weeks not years.
- Replace functional silos with cross functional teams: Focus on building agile, cross-functional teams that are self-motivated and possess entrepreneurial capabilities. The cultural gap between the traditional and new setup is immense and requires leadership from the very top.
- A “braided” approach to IT: Operations, business and IT working together as peers rather than independently or hierarchically (i.e., IT serves the business).
The “design thinking” approach has three critical components:
- Immersion: The organizational teams must get involved with customers to understand them better with a keen focus on pain points. Though these tend to be ‘soft’ insights they must somehow be linked to hard operational metrics.
- Ideation: The focus here is brainstorming on pain points toward their resolution. Tools include ideal-scenario visualizations and test cases.
- Iteration: Deliver new products and/or tools, testing and improving them as fast as possible. Work in short, weekly sprints. The willingness to let go of ‘pet’ features and ideas if they fail the customer test is a critical prerequisite here.
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Digital Insurer's CommentsDesign Thinking is a human-centric approach to innovation that calls upon the designer’s toolkit (including but by no means limited to technology) to understand and integrate the needs of people (in our case insurance buyers). Design thinking isn’t just about the product or the packaging but the total customer experience.
It starts with empathy. Not just: What do our customers experience when they interact with us? How do they perceive pricing and communication? But: What do we miss? Which unsolved problems do they have? What makes them feel secure or insecure? What is the larger context in which they act? In the words of the late Steve Jobs, “the broader one’s understanding of the human experience, the better design we will have.”
And the more insurance we will sell . . .
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