Modeling the pandemic risk
How to model the COVID-19 pandemic and forge a path to better risk insurance.
Lately, words like “strategy” and “innovation” have become the new “amazing.” You can’t describe everything from a grilled cheese to the Grand Canyon as “amazing” and expect the word to contain the same weight. It’s a word many industries have embraced in recent years. As one of the oldest industries in the United States, the insurance industry definitely has pockets of innovation, like the new ways of educating and delivering benefits that the insurtech realm has brought us, or some of the new start-ups making an effort to use more consumer-friendly language in their contracts. But still much of it remains static. Perhaps the use of words like “strategy” and “innovation” are meant to paint a picture of companies working to push past the traditional ways of doing business and embark on more exciting paths, with new products and services that speak to today’s customers.
I’d like to examine the word "strategy" not as a buzzword, but as a guide. Taking a step back—what does strategy mean, anyway? In its purest definition, strategy is “a plan of action or policy designed to achieve a major or overall aim."1
It’s so simple! Strategy simply means—what do you plan to do? And to what end? It’s easy to get bogged down by the concept of being strategic. You can overthink it, perceiving it as an aspirational, complicated process of identifying a long-term set of goals, steps, decisions, methods, ideas…soon your mind is overwhelmed with possibilities and you freeze. Trying to explain what “being strategic” means is like trying to explain how to get up and live life every day. Some people wake up and let the day find them. Others adhere to a strict, timed schedule and consistent order of activities. Some strike in the middle, with a high-level idea of what they want to achieve that day, but some wiggle room on how it gets done and when. None of these constructs are right or wrong. But being intentional about where you want to go and what you want to do, and then conceptualizing how you’ll get there, makes for a better framework for the day.
Now let’s apply that construct to the insurance industry.
The supplemental insurance market (which includes products like the health trio of accident, critical illness, and hospital indemnity products, as well as short-term disability and life) is such a dichotomy; at once both consistent and ever-changing. A new product type has not entered this space in quite some time; accident indemnity coverage was the most recent product to become a common offering in the benefits space—and that was quite a while ago. So when we talk about “strategic innovation,” it’s not really an influx of new and different products coming to market. Innovation in the voluntary market thus far has been about new product features, new things to cover, new ways to pay. Too often it stops there. It’s extremely important to evaluate the market and study your competitors, estimate market share, and project sales goals. It’s even more crucial to round out those foundational things with some key questions to identify what your strategy—or plan of action—should look like:
The way a product is built varies widely; some companies have a robust product development process. They may incorporate consumer research and have someone skilled at leading design-thinking and brainstorming sessions. Maybe your product team follows a disciplined methodology, from the discovery process through launch and feedback. Or maybe none of this happens at all! What’s important about wherever you’re at is that you recognize your gaps and work with partners who can help.
Do your brainstorming sessions sound like this? “Nothing is off limits! Any idea is great! Just write it on this sticky note!”
These sessions can be productive and generate ideas, but there must be guardrails; it might be an awesome, creative idea to *insert insane insurance idea here," but will a state approve it? Is it legal? Is it something you can administer? Will a broker take a chance on trying to sell it if it’s too “out there”?
I’ve had the privilege of leading several product development efforts over the years. In one scenario, a unique and impactful product was designed based on consumer research and gaps in the current market. It was received well internally, but when it came time to launch, it fell flat. I stepped into the project just after the official launch and wondered why we weren’t seeing the quote activity we expected. This product was so much better than the previous version, and it was chock-full of messages for all the voluntary benefits audiences:
These approaches made sense. They were clear, simple, and provided a “what’s in it for me” for all parties involved.
So why wasn’t anyone quoting it?
Well, it turns out these simple messages were getting lost in the variety of different features included in the product. There were lots of different riders. Some add-on programs weren’t bad ideas, but got overlooked with everything else there was to react to. And while the messages above were evident to me as I came onboard, they weren’t central in the communication of the product and they weren’t incorporated as clearly in the sales team training. The incredibly strong market message got watered down by product detail.
Brokers want simplicity and a strong message. Employers want an easier experience implementing a voluntary program. And employees need valuable coverage. Going back to the key questions—it was clear to me that we had answered them. Let’s examine what went wrong.
It didn’t take a ton of time or effort to pivot. A focus group with the sales team, some discussions with the brokers and enrollment firms, and a revamp of the marketing collateral helped adjust and simplify the messaging. It also did something else; it helped play to our strengths.
The VB market is strong. There are many ways to find success here. But your strategy must incorporate an understanding of not only the nuances of this market, but of who you are as a company. What are you great at? What do you struggle with? Where should you partner externally, and where might you place more emphasis on the strength of your internal teams? It’s different for every company. It can be overwhelming to know where to focus.
Another product launch I led was the rollout of a new hospital indemnity product. This market is quite commoditized, lacking opportunity for a long list of unique benefits. It’s also regulated by some Internal Revenue Service (IRS) rules that are a bit fuzzy and confusing to most everyone in the market. The designs have become oversimplified in order to play it safe. How do you innovate when your list of benefits is three, at most? In this instance, we focused on usability. How can we remove any barriers to claim payment? What traditional exclusions can we get rid of to ensure that when a claim is filed it’s paid? And how might we tie this product more directly to the medical plans? The product was written on an individual chassis but distributed at the worksite alongside mostly traditional group products. How could we make it stand out?
Instead of apologizing for that strength—we promoted it. This product was customizable at the individual level, something that the traditional group companies couldn’t administer. It may not be the solution in every scenario, but leaning into what made the company different, with a focus on the end-user, changed the talk-track with our brokers and employers.
Circling back on the three key questions, the answers looked a little different from the previous example:
By the time we launched, we had a firm, comprehensive training plan with which to arm our sales team. It not only covered an in-depth understanding of the product, but also incorporated selling strategies, talk-tracks, and proposal suggestions.
It’s an exciting time to be in the voluntary benefits world. We’ve all just lived through a historic world event, which not only impacted our livelihood, but also brought to light the need for comprehensive protection from the cost of an unexpected health event. The future of supplemental benefits is ripe for innovation, and the changes today’s carriers decide to make can have real, lasting impact on real people. Things like mental health awareness and a new confidence in and reliance on telehealth can provide new pathways to take toward innovative coverage. The next frontier of today’s workforce—looking at both the gig economy, and the “Great Resignation”—has meant a shift in perspective that many employees now have on what they expect and need from an employer. We need to look for creative ways to not only deliver coverage, but ensure we are meeting the needs of our customers at every stage of the purchase story. The great thing is that there’s not just one way to do this. Incorporating those three key questions, and being intentional about how you want to show up and what you want to deliver, can supercharge your offering and deliver real value to the markets we serve.
1Merriam-Webster. Definition: strategy. Retrieved June 29, 2021, from https://www.merriam-webster.com/dictionary/strategy.