James Downes, founder and director of Pancentric Digital tells Life Insurance International editor Ronan McCaughey how insurers can better innovate and meet customers’ unmet needs using design thinking.

Life Insurance International (LII): What is insurers’ typical approach to innovation? 

James Downes (JD): Insurers typically start innovating from what they know about. Traditionally, an underwriter might come up with an innovation and then the insurer builds a platform to deliver that, which is turned into a service and delivered to the customer.

While this approach works it ignores the most important person, the customer.

A better way to do this is to start with the customer and understand their unmet needs.

Once we understand the needs of customers, a product service can be provided to deliver that, which feeds back into the platform and drives innovation.

So, Instead of starting with the company, we start with the customer. We use design thinking as a way of unlocking that customer need and co-creating solutions with those customers in a way that can drive value into an insurer’s business.

Common approaches can tend be quite analytical, which is valuable for optimising existing processes,  What design thinking does is the opposite. It’s about exploring and quantifying the unknown and uncharted.

Design thinking is based on applying some of the tools that designers usually use to solve problems and applying them to what are perceived as non-creative tasks.

Insurers tend to use tools such as focus groups and market research. However these, are better used as validation tools than research. Numerous studies have demonstrated that everybody lies in market research, they say what they think you want to hear. Similarly in focus groups, people will always follow a strong leader in the room.

With design thinking we can go beyond this to unpack the complexities of people’s lives and get to their real needs.

About half of our business is in insurance and we have a long track record working in insurance as a digital agency delivering innovation, transformation and growth. We work with British Friendly,  Cigna and AXA in L&H, and with other insurers and brokers in GI.

At Pancentric, we’ve got the right tools and experience to support insurers delivering customer innovation around customer need. We build business cases for companies and then we can take that forward into fully delivered products and services.

LII: How good are insurers at meeting customers’ unmet needs?

JD: They all struggle with it. Everyone talks about being customer centric and putting customers first, but there is actually a massive reality gap.

It is not because insurers don’t want to meet the unmet needs of customers? But they don’t have the tools and are restrained by internal silos and legacy systems.

LII: How much innovation are you seeing in the life and health insurance industry?

JD: Not much. There is InsurTech activity, but it seems to be more heavily focused on general insurance.

There are people talking about blockchain, but it is technology looking for solutions. Where is the customer need that blockchain is solving?  Without this understanding,   you are just trying to sell a solution to someone.

The industry thinks insurance products are complicated products, but customers don’t. They want to be able to dial insurance services up and down. There are lots of simpler things people expect from insurance products, but insurers can’t provider them because their systems don’t support it.

Platforms are a big problem and there are lots of platforms built on old technology, and that means if you want to do a big project it might take IT a year to do it, that’s why we are building a new PAS for to implement at British Friendly.

One of the most telling changes recently was Lemonade opening up its API which allows them to increase their distribution.

LII: How concerned are you that insurers face significant disruption from tech giants such as Amazon and Google?

JD: I suspect that Facebook and Google know much more about me than my insurer does and they have have the capability to do something with that.  But if I’m Google, I can’t be bothered with an industry like insurance.

Yes, the insurance industry is huge, but what Google do is something repeatable at scale. For Google, there are bigger things to go for, like owning the AI space.

The one everyone should be worried about is Amazon. I don’t think it’s necessarily about Amazon doing insurance. The big threat is Amazon Lambda and Greengrass this means instead of having servers on the Amazon cloud you can add functions. So, an insurance quote could be built into Amazon web services.

Amazon could be a service platform for any other insurance disruptor.

Pancentric Digital is a strategic digital agency based in London. Its team helps clients to innovate, transform and grow their businesses. Visit www.pancentric.com for more information.