Article by Sue Larsen. Originally published 26 June 2017. Updated 27 October 2019.

The subject on every life insurer’s lips at the moment is the Life Code and with good reason. With a firm delivery date of July 1, 2017, Life Code committees have been busy restructuring internal practices, rewriting policies and training staff to ensure they are compliant with the code. Whilst the changes have placed enormous pressure on Life Insurers to revisit their modus operandi, most people would agree the changes are necessary and serve as a timely catalyst for implementing practices that will future-proof the industry.

Indeed, strategic decision makers have a big job to do. Not only do they need to overcome a negative public image, seemingly characterised by distrust and scepticism, but to future-proof the industry, they need to implement strategies that meet the rapidly changing expectations of consumers in this digital age and it needs to happen quickly.

In his address to the Insurance Council of Australia (Feb 17, 2017), ASIC Chairman, Greg Medcraft says, “As customer expectations have changed and customers are more empowered than ever, we now live in a world with technology and social media at our fingertips. Individuals now have unprecedented access to information and as a result, if businesses are not behaving in the right way, the crowd will let them know, if not the headlines.” 1

Time is of the essence and while the Life Code itself is an important step forward in showing good intentions to the public, how the Industry translates and implements the requirements of the code will now become the focus of public scrutiny. If the public deems the industry’s response as inadequate, the criticism will come hard and fast.

So, what exactly does today’s Life Insurance consumer want?

In a January 2012 report by PwC, Insurance 2020: Turning change into opportunity2 it states that consumers are increasingly demanding “transparency, speed, simplicity, and choice”.

Many of us would immediately consider technological advances as the means by which these customers’ expectations will be met, but it is prudent to acknowledge that these expectations also refer to a set of behaviours by which business needs to be conducted. Unfortunately, these are the very behaviours the industry has been accused of lacking and for an industry of people so passionate about making a difference for customers, this is a very disappointing and unintended outcome.

In an interview with RiskeBusiness, when asked about the main industry challenge affecting the Life Insurance Industry over the next 12 months, Group CEO and Managing Director of TAL Life, Brett Clark, said “The trust and confidence that consumers have in the life insurance industry is critical and vital for the longevity of the industry. We need to ensure Australians continue to trust us and maintain their confidence in us despite all the media and regulatory scrutiny… Ultimately, we need to ensure we are thinking differently, and can do things better.” 3

So, if regaining the trust of our customers requires us to think differently about how to meet our customers’ expectations, we really need to understand what transparency, speed, simplicity and choice actually means to our customer.

The business dictionary defines transparency as a “lack of hidden agendas and conditions, accompanied but the availability of full information required for collaboration, cooperation, and collective decision making.”4 Our clients will be more likely to collaborate and cooperate with us when they are provided with the full information on which to base a decision.

As an industry, we need to consider the information we are giving to clients. Are we providing enough for them to feel empowered to make a decision? In this digital era, clients will get hold of information from somewhere.  It’s far better that they receive balanced, contextualised information from us rather than from sources who may be ill-informed.

Speed and simplicity are pretty straightforward to understand. We need to deliver information and respond to customers quickly, and make it easy for them to understand or do what we are asking of them.

Choice is an interesting criterion. It refers to “the right, the power or the opportunity to choose.” 5 This definition is particularly salient as it reflects the shift in modern consumer expectations which are all about being empowered to make decisions that are personally “right” for them. Today’s customer wants the right to choose and to do this they need to be equipped with adequate information on which to base a decision. This takes us back to transparency and providing full information! You can’t really provide customers with a meaningful choice, unless you are also providing them with adequate, transparent information on which to make a decision.

We all know the old adage “insurance is sold, not bought”, but those days are gone. As an Industry, we need to better understand the psychology of choice and the important role it plays in empowering and building trust among our consumers.

So, understanding the words is easy. Putting them into action is where the challenges begin for Life Insurers, especially when they do not have direct control over every part of the process.

Consider part 8.10d of the Life Code: “Where we require you to attend an independent medical examination, if you request, you can choose from a list of doctors we nominate for your independent medical examination, although this may cause delays to your claim depending on your chosen doctor’s availability.” 6

When discussing with my Life Insurer clients how they’ll respond at an organisational level to members who request to see an IME of their choice, often the response is that they’ll provide members with a list of doctors- their name and speciality- and have them select one. Alternatively, some will offer members a choice of 3 appointments with a specialist. Then there are those who will provide a choice of appointment with one of 3 different IMEs.

Does this meet the requirements of the Life Code? Well, yes, technically it does…

But does it really meet customers’ needs for transparency, speed, simplicity and choice?

And does it go far enough in rebuilding the trust and confidence of a sceptical public at a time when the Industry is already facing weak growth in new business and challenging profitability? After all, isn’t this what the Code was designed to do?

If I were a member of the general public asking for a choice of IME, I suspect I would not be fully satisfied with being offered these options.

I would want to be provided with enough relevant information about a range of Independent Medical Examiners so that I could make an informed decision about the one I wanted to see. I would then want to have a choice of appointment date and time so I could select the one that worked best for me. That would make me feel empowered and bought-in to the process. My willingness to attend the appointment would be higher and I would feel more confident that the process was trustworthy.

Melissa Carruthers, Senior Consultant at Deloitte Canada, says “As customers seek greater autonomy in decision-making, insurers must deploy infrastructure that supports digital technologies, simplifies the purchasing process and provides personalised advice.” 7

So, this is where it gets difficult for Life Insurers. Life Insurers don’t have a lot of direct influence over the activities or organisation of Independent Medical Examiners, so how can one offer a solution that will meet customers’ expectations? Truthfully, it can’t be done alone. Insurers need to partner with innovative, forward-thinking IME providers who understand the need for Insurers to meet the requirements of the Life Code and who are willing to play their part in future-proofing the Industry by providing it with solutions that help them meet customer expectations.

“True innovation starts with an insight into what the customer actually wants or needs, then moves to finding a way to achieve that. The customer is, of course, always right. But for the customer to know what they want, simple, transparent products, processes and information are needed, and that’s down to the professionals to make happen” says Sian Fisher, Chief Executive, Chartered Insurance Institute.8

Moving forward, the industry will look for independent solution providers who understand the rapidly changing demands of the sector, and embrace speed, simplicity, choice and transparency. Legacy processes and providers just cannot meet these demands.

As we look to the future, the time is right to consider those who are taking a fresh, customer-oriented approach, and work nimbly to tailor solution that meet the sector’s evolving needs.

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