In case your improvements are unknown, you might be underrated
In the midst of the economic turmoil in 2020, we’ve heard a lot about price adjustments to existing insurance products and product innovations to address new areas of risk.
As the COVID-19 recession tests the resilience of their balance sheets and catastrophic events escalate, insurers are pulling business levers in response. But are these the levers for which you achieve the right ones?
In our most recent report, Where is the payback on digital innovation in the insurance industry, Jean-Francois Gasc and I examine five categories of digital innovation to determine which of them offer the best return on investment. We found that leading insurers are more likely to invest in customer-centric digital innovations – especially those in sales. There were fewer correlations between leadership and innovation in products or other inward-looking categories.
Our analyzes were based on data from Accenture’s proprietary digital innovation database. It captures public innovation announcements from the top 30 insurance companies in all major markets. It is important to note that these are English language sources that are widely communicated in the market and seen by analysts and investors.
An insurance company will only be known for what it communicates. If there’s a question about whether messaging is important, this is it. To make a real impact, what you tell the market about your innovations is important. This is especially true in a recession where investors are more selective and focus on competitive advantage.
Beyond the innovation theater
Insurers need to think about the areas of business where they can have a legitimate impact on performance. And they have to talk about their innovations in such a way that clichés and buzzwords are overcome.
The usual talk about where to spend time and money does not convey any innovation value. Instead, focus on the way innovations attract and retain customers and create a messaging strategy that shows investors that your business is a safe place to put their money.
The medium is (still) the message
Public innovation announcements can be an effective way for an insurer to attract analyst and investor attention, but it is not the only way. Some get what they need through an ad strategy.
Progressive, for example, generally doesn’t make public announcements about their innovations, but doesn’t have to. Their well-advertised price comparison model was a strong value proposition for consumers. The brand value and an advertising budget that has more than doubled since 2016 appeal to analysts and investors.
Messaging is a survivability
While billions in advertising budgets would be unaffordable for most insurers, communicating business value is no longer optional in the marketplace. It is important to make customer-centric innovation investments and bring them to market in order to attract and retain capital – and this is a critical time to consider.
The harsh reality is that insurers need significant capital reserves in order to maintain a good rating and underwrite the new risks their clients are now facing. Talking about what you do and what value you bring to the customer can keep doing that and future proof your business.
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