Product development cycles should focus on giving the majority of users a seamless experience with a product that addresses real customer needs

Insurance companies need to find ways to drive complexity out of their products if they want to address rapidly evolving customer needs and reduce the time it takes to get those products to market.

This is the word from Louw Hopley, co-founder and CEO of insurtech platform Root, who says there’s no use pretending that the insurance industry isn’t inherently complex. He points out that there are many ways to reduce this complexity, although this almost always requires changing the way products are designed.

Insurance companies have traditionally had to design products to work around their outdated systems, he explains, leading to increased, rather than reduced, complexity.

“Until recently, new products had to be designed to work around systems decisions that were made to support products built a generation or more ago. This meant that they were built around a series of compromises, not around delivering the optimal customer experience.”

Simplicity leads to customer satisfaction

Most people buying insurance products are unhappy with the complexity they’re subjected to. They want products to be easy to understand and buy, with a minimum of fuss. In an age where customer experience drives business success, starting with simplicity in mind is vital.

“The more you ask of a customer, the less successful the product will be – we’ve seen this over and over again,” Hopley comments. “But it doesn’t have to be this way.”

Hopley notes that insurance companies often struggle with internal concerns that lead them to stick with their legacy processes, despite the obvious drawbacks.

“They have developed specific ways of operating over the years and often feel averse to any change because of the perceived risks or inconvenience of doing so. But this attitude has the hidden cost of preventing them from focusing their efforts on delivering the differentiated value that will keep customers coming back to them.”

Taking a customer-centric approach

This requires that product teams start with customers when designing their products. Following the example of other more progressive industries, insurers need to increase their focus on the differentiated piece that customers truly value, rather than getting side-tracked by creating complexity in the product structures that customers don’t even understand, Hopley says. Instead, cutting features and rules not only makes products easier to consume but also easier for your teams to manage.

“Trying to create a product that’s all things to all people is a recipe for increased complexity,” Hopley explains. “If you’re trying to plan for every eventuality, you end up with an inferior customer experience. Rather focus on ensuring that the majority of users have a seamless experience and that the product itself addresses the customer’s most important needs in a world-class way.”

To create disruption inside an industry like insurance, companies need to look beyond their traditional markets and tap into new opportunities such as micro- and embedded insurance. This will often require seamless integration with the services of other companies, for example, allowing insurance to be offered alongside travel bookings or concert tickets without any additional effort on the part of the customer.

“To enable this kind of frictionless sales experience we have to find every opportunity to drive complexity out of the system,” Hopley comments.