Redefining insurance for generation next, what the industry must do now
Funmi Babington-Ashaye, the immediate past president and chairman of Council of the Chartered Insurance Institute of Nigeria (CIIN) has set what can be described as blue print, that the nation’s insurance industry must embrace to attract the next generation of talents, as well as customers. In her valedictory lecture held recently in Lagos titled ‘Insurance and Generation Next – Meeting the Needs of Stakeholders’ she identified measures that are needed now to attract the next generation. Modestus Anaesoronye presents the report in part.
To the next generation of insurance practitioners, the way we work would impact our ability to attract, retain the best and brightest into the profession and industry. Quoting Jardine (2017), she said “if we are to continue to attract the best of the world’s talent we need to start to consider new ways of working, possibly with a more flexible approach to working hours and job sharing.
“We also must sell the market more effectively, to demonstrate to ambitious young people that it offers great opportunities for them to have a fulfilling career”. Now, more than ever, our industry has more opportunities for individuals with diverse skill sets—mathematics, actuary, risk management, information technology, science and statistics. I dare say that the youths, if persuaded, will find fulfillment in our industry. Somebody needs to engage them.”
Repackaging Insurance Products
As professionals, we need to take our bearing from the market place by packaging products that meet the needs of stakeholders. Take for instance, the life insurance policy, I mentioned earlier. The message often is that the breadwinner may die prematurely or suddenly and so, to protect the family, it is necessary to buy a life assurance policy. Persuasive as this position is, we cannot be oblivious of the fact the life expectancy of the populace has improved beyond what it was two decades ago. Youths no longer marry early and would prefer to have small-sized families. Besides, many people now lose their jobs due to macro-economic challenges.
What the youths will desire in my view, will be value-driven policies that will take these scenarios into consideration, provide waivers for out of job situation and support for disabilities. Generation Next youths have seen friends and neighbours lose their jobs, homes or ability to earn a living. They need policies that will provide protection against loss of income due to unemployment. For instance, unemployment protection insurance, also referred to as redundancy insurance, protects policyholders’ incomes, if a person suddenly loses his job for any variety of reasons. Subject to the terms of the policy, it should pay out a monthly sum for a set period of time to keep the insured going and the policy active. Thus, our product should be responsive to their needs to attract the right patronage. The information about our product offerings must be communicated through their social media. In other words, to satisfy younger generation of buyers, life insurance products need to provide multiple solutions, such as protection from unemployment and disability. Insurance products must seek to address these challenges to retain their appeal.
Data Mining Strategy
In our various organisations, we have huge data on customer profiles and market structure stored everywhere and even in the cloud. Are we leveraging these data to improve stakeholder mapping and business strategies? One strategy recommended to insurance companies by Bill Gates in this IT-driven environment is data mining. According to him, insurance companies have products that are profitable with some customers and less profitable (or unprofitable) with others. The experience is related to loss experience with policyholder claims. Data mining can provide an insurance company with customer profiles and geographies where its loss experience is very low or very high. This information will influence the entities’ marketing and pricing strategies to people in an age group or geography based on the loss experience. When you have that kind of variability, it is worth a lot to do data mining to help develop your product strategy. “The powerful capabilities of data mining will help companies determine how to acquire new customers, whom to market to, how to tailor and price their products and how to attract individual customers (Gates, 1999, p. 234)” who in this case, are generation next youths.
Product and Pricing strategy
To attract Generation Next to patronize our products, the pricing strategy must be right too. This category of consumers will detest, for instance, the age-old practice of compulsorily buying fixed rate auto-insurance policies every year when in fact, the car is in the garage because the customer works from home most times or travels by train. According to Hamel (2002), the British Norwich Union overturned this industry practice by offering its customers insurance by the mile. “Rather than pay to protect a car that is sitting in the garage while you work from home, carpool or travel by train or plane, you just pay for insurance when you are on the road”. Using a global positioning system, pay-as-you-drive customers are charged an insurance premium that is based on how often, when and where their cars are used. In other words, the implication is that the insured pays premium only when he is actually on the road. This is a novel pricing structure that will most probably appeal to Generation Next. Indeed, it is insurance for the mobile generation. Founded in Silicon Valley, the technology Apps and digital insurance platform provide tracking, price information, and on-demand insurance coverage for single items, which allows customers to easily ‘turn-on’ cover for short periods of time. But is our environment ready for this type of initiative?
CONCLUSION
The Insurance Profession/Industry is at threshold of its evolution in which developments in technology will significantly impact its product offerings, operations and the skill sets of personnel required to deliver value to its diverse stakeholders which, in the near future, will be dominated by Generation Next. Given the declining inflow of new entrants into the profession, the fear of a talent gap is rife. The causes of this trend like poor perception of the profession, age-long conservatism and information gap about the robustness and beauty of Insurance must be frontally addressed.
We need to change the wrong perception by showcasing the career opportunities that exist, the products we develop, the risks we assume and the professional advisory services we provide. As captains of the Insurance industry, we individually have exciting stories to tell about our experiences and career path that will stimulate the next generations. Let’s create the opportunities to tell them the stories and win more converts to our profession.
Without doubt, our underwriters, actuaries, risk engineers, claims specialists, risk managers and brokers have special skills to drive the growth of the profession and industry into the near future. To ensure that there is no gap, therefore, the current generation must begin to give serious and strategic consideration to the issue of succession through mentoring while the Institute must strive to persuade and partner with many more tertiary institutions to deepen knowledge in insurance while producing many more qualified manpower for the profession. In addition, the Institute must seek international partnership to obtain funding and technical support for its College of Insurance.
The challenge of meeting the needs of Generation Next is real, severe and requires an industry-wide approach. The attitude and disposition of Generation Next have deep messages for us. We must listen, hear and act. In the words of Peter Drucker, “the most important thing in communication is hearing what is not said.” It is my earnest hope that we would make a difference before we quit the scene.”