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Innovation has delivered product development projects ranging from customisable high-net-worth products to blockchain-based life products. One of our lessons has been:

Customers buy propositions, not products

Fun

Zurich Insurance (UK) have produced a fun tool to interest you in buying one of their life products. It asks you to take a selfie and then, based on the image received, it estimates your age and gives you a quote for life insurance – you can try it here.

It’s completely addictive and of course the inevitable outcome is that you keep going back to the app to take better and better pictures of yourself to appear younger and reduce the quoted monthly cost.

As you take more images you discover how vague and inaccurate this technology is, but it doesn’t matter because, by now, you’re convincing yourself that Zurich thinks you’re eighteen years younger than your birth certificate suggests. In the meantime, Zurich flash prices at you with every new shot. You can even use it to get quotes for anyone in a photo on your device. Fun and dangerous in equal measure.

Utility

This tool isn’t a product, it’s a kooky piece of marketing that has an unlimited shelf life. The actual product platforms behind the quote calculator can be changed at any time. What it does is draw on consumers’ vanity in a fun way to attract them to a product with real utility.

At some point or other it might go viral. This is important in the UK where insurance agents are virtually extinct. It forms part of the customer proposition – a combination of products, services and marketing that together provide a compelling reason for a customer to place an order.

Agents have a strong foothold in Asian markets, where personal trust is important and where regulators are relaxed about margins. Here the most successful insurers produce a continual churn of products that give their agents reasons to contact prospective customers. I’ve seen what these insurers do at first hand. They are smart folks who build a core suite of products based on their desired risk appetite, then build in internal riders to vary the saleability to different customer groups through their army of agents.

Competitive advantage

The best insurers produce such good modular products that in adopting this approach, they also keep regulators happy because the effective risk range is spread and in producing modular products, they are forced to rationalise their databases and policy administration systems to enable more rational back-office operations.