Richard Thaler’s Nobel Prize-winning “Nudge Theory” is finding its way into tech and, specifically, insurtech.
His contention is that positive reinforcement and indirect suggestion can affect the way humans think and behave, and therefore the outcomes of that behaviour. Insurtech is defined as being the use of technology and innovation to help drive savings and efficiency. It now seems that some insurers are bringing these two nascent disciplines together in an effort to drive better outcomes and reduce cost, in this case, claims.
Two examples of this fusion of new ideas were referred to last month in this Reuters article.
Aviva are quoted as looking at working with a health app, Tictrac, as a corporate healthcare plan add-on which tracks employees’ sleep patterns, exercise and weight. The app then suggests (presumably physical) challenges to help prevent the onset of what might become costly conditions – “nudging” individuals to do something before a problem occurs.
The second was a derivative of telematics which looked at how it might prompt real-time intervention. The example quoted was a telematics-fed app that, if it detected voice patterns that suggested the driver was getting tired, would recommend pulling over to grab a coffee and take a break. The insurer would even be willing to pay for the coffee in the hope of offsetting a costlier accident.
But what about the world-weary insurance customer?
Insurers dabbling in trying to help customers avoid something that they, the insurers, would eventually end up paying out on is always something of a cleft stick in a consumer market already cynical of insurers’ motives.
It’s possibly even more tricky when, despite assurances to the contrary, the consumer might feel like their personal life, in the case of the health-related app, is being pried into and monitored 24/7. Telematics evolving to listen out for speech patterns is likewise surely another step up the “compromising of personal privacy” ladder?
The point being missed
For me, widespread consumer interaction with, and benefit from, insurtech has to be a natural, transparent, consequential occurrence, not something that requires the installation of a device, or a leap of faith that your personal habits and motivations are not somehow covertly being tapped-into.
I have no doubt that insurtech will provide the layer that helps consumers and their product/service providers understand each other at a level that will inevitably result in better product design and lower operational costs.
However, in my opinion, that requires the “tech” part either to flow seamlessly into established methods of transaction, or to wash away convention completely and establish an entirely new, open and much more intuitive way of interaction between the parties.
Where we need to go
We seem to be in that “in-between” stage at the moment in many cases which results, at best, in lower take-up rates of new tech, affecting the potential for benefit longer-term or, at worst, a prejudicial consumer scepticism that tech is taking advantage of data to the sole benefit of the service/product provider rather than a shared benefit to both parties.
That perfectly sums-up our approach to how we evaluate any opportunity, tech or otherwise, that you might be able to take advantage of in your market. Does how you might capitalise on that opportunity result in benefits for all relevant parties and, if so, what is the most practical, business-led way of achieving it? Just as importantly, how do you go about understanding customer satisfaction, and how do you build in the capability from the start to make changes based on the feedback you get?