According to a new survey, insurance firms are increasingly using behavioral science approaches to better client decision-making.
The report, by UK-based specialist insurer Hiscox and behavioral science researcher the Behavioral Insights Team (BIT), found that while only 3% of insurance firms were using behavioral insights approaches in 2015, this has now risen to 29%. Two-thirds of these firms say they have experienced improved business results. We have more details on commonwealth bank loan protection refund here; just read it and see will it apply to you or not.
These findings come at a time when insurers are increasingly looking at how they can better use behavioral science to improve their operations. The report showed that 46% of respondents had an eye on these ideas, with many already conducting or planning pilots.
What is Nudging, and what does it imply?
Nudging is the use of subtle, psychological “nudges” to influence people’s behaviors. Nudges are typically less persuasive than their alternatives but more effective and ethical. For example, a drink company could nudge consumers towards healthier drinks by adding visual cues that highlight healthy choices within close proximity or adding signs encouraging people to choose a healthier drink.
Nudging should be expanded into four areas
First, insurers should create tailored nudges that are suited to their specific customer needs and contexts. A health insurer might design an app that helps people remember when they need to book check-ups with their doctor; a life insurer could send reminders about completing beneficiary forms.
Second, companies can improve the decision-making of their staff by applying insights from behavioral science to their internal policies and procedures. The report found that many companies are already doing this—for example, by optimizing the timing of emails or encouraging managers to praise employees in public.
Third, insurers should use nudges to help customers make better choices about their insurance needs. For example, they could implement a “nudge-based” solution to increase demand for life insurance among older customers. They could also consider nudges for mitigating online risks—for example, by designing websites that make it harder for users to accidentally reveal personal information.
Fourth, insurers can use behavior change techniques to help employees achieve their own personal goals, such as increasing physical activity or improving financial literacy. In turn, employees can then pass this on to their customers, with the aim of building healthier and stronger relationships.
The report’s authors argue that by undertaking a more systematic approach to behavioral science in insurance, firms can create a “virtuous cycle” in which the best ideas are shared and replicated across different departments and teams..”
Companies are finding great benefits in terms of consumer uptake, contentment, and loyalty as a result of implementing these principles into the professional realm. Nudging’s future is already being written, and it will be a defining component in the industry’s evolution.