Design Thinking  | 3 MIN. READ

Transforming Life Insurance With Design Thinking

ExperiencePoint, January 31, 2019

Transforming Life Insurance With Design ThinkingMuch like the banking industry, the insurance industry has long been mired in tradition. Processes are rigid and the products are complex and a little confusing to consumers. Those processes, policies and procedures served the industry well in the past, but today’s consumers are a different breed.

According to a report by McKinsey, today’s insurance consumers want transparency, flexibility and speed — creating the need for the traditional insurance industry to pivot and change, or lose relevance.

The report, Transforming Life Insurance With Design Thinking, argues that design thinking can connect every aspect of the business — marketing, distribution, underwriting, claims — and in doing so, change not only processes, but people too.

Let’s look at a present day example of a customer’s experience with an insurance provider. A customer has a life event — has a baby, buys a house — and reaches out to the insurance provider. The products and fine print can be confusing. The customer service, reactive at best. The customer wonders why the process is full of so much friction and why the transaction can’t be more speedy or even instant. McKinsey’s report found that this is one of the top leakage drivers for the insurance industry.

Other industry challenges include:

  • Low engagement

  • Limited ability to meet the preferences of millennials

  • Legacy cost structures and IT systems

  • Slow embracing of change and technologies industry-wide

Together, it all adds up to a need for change. In applying design thinking, the industry can rewrite that customer journey.

According to McKinsey, the principles of customer-centric thinking “can deliver an end product and be disruptive enough to transform an insurer’s culture along the way.”

But that means optimizing individual touchpoints from end-to-end to deliver a better customer journey. That requires a complete A-Z overhaul, applying creative thinking to reinvent how customers and the company interact with each other.

Here’s what the McKinsey report recommends:

Instill customer empathy. Fintech is beating insurance at this game, and the industry must get caught up. Real empathy is more than just using data to collect soft insights. It’s about improving customer experience metrics.

Get comfortable with an iterative approach. This means relying on customer feedback, and testing the “minimum viable product” with the goal of refining and reshaping it based on what customers’ preferences are.

Silos? So last year. Yes, functions are entrenched in the insurance industry and have been operating that way for decades. But they’re too rigid for today’s fast-paced environment. Agile, cross-functional teams work differently, with the team owning the customer experience. It means more accountability and ultimately a better customer experience.

A new focus on IT. Customers expect digital options. If they can’t do if from their iPhone, forget it. IT, operations and corporate leadership must work together to deliver that customer experience.

All of this means getting creative and customer-centered and reimagining the entire process from the company’s website, to its digital presence, to its product offerings. The only way to meet the needs of today’s insurance customer is with design thinking, because if you can’t put customers at the center of your solutions, they will find what they need elsewhere.


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