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Disruption Vs Innovation in Insurance

3 minutes, 11 seconds read

People concerned with insurance have been using the terms- ‘innovation’ and ‘disruption’ interchangeably, perhaps because both correspond to building something ‘new’. However, there is a fine line between the two. All disruptors are innovators whereas, not all innovators are disruptors. Let’s delve deep into the difference between disruption and innovation in insurance.

Who are the ‘Disruptors’ in Insurance?

Disruptors drastically alter prevalent businesses, services, or products. They tend to be more creative, useful, impactful, inexpensive, time-savvy, and most importantly – scalable. 

As an example, Lemonade took in $57 million in premium revenue from 4,25,000 customers in 2018. This four-year-old startup was able to sell premiums to millennials- 90% of whom were purchasing insurance for the first time.

Reason- instead of an all-encompassing insurance package, Lemonade is keen on distributing micro policies as low as $5, which the customer perceives as useful. They’ve simplified the claim settlement process and within 3 minutes, a customer can get his refund credited to his account. While Lemonade sells its insurance policies through chatbot Maya, chatbot Jim handles claim settlement. Such AI-powered bots can handle multiple customer requests just as human agents and are better in detecting fraud. 

The disruptors are prone to adapt to changing customer preferences, which the traditional insurers are reluctant to because of the fear of losing existing customers. Disruption in insurance can break the barrier of the lower market penetration rate.

What’s Innovation in Insurance? 

Innovation is independent of drastic changes in businesses. It focuses more on bringing positive business development by delivering convenience to the customer and improving operational efficiency.

Innovation is not always about introducing new technology. It is also about harnessing existing technologies to build innovative solutions. For instance, blockchain technology has been there for decades; but the insurance industry has recently utilized it for algorithmic trading, smart contracts, policy distribution, and claim settlements.

For example, AXA Fizzy provides paperless flight insurance based on blockchain technology. Every user interaction is recorded and executed in the ledgers- from buying a policy to claim settlement without any human intervention. 

Other examples of innovation in insurance include Robo-advice, NLP (Natural Language Processing) to understand customer queries, insurance for IoT devices, AI-powered underwriting, automating insurance workflows, and Machine Learning technologies.

Also, read – Innovative insurance products of 2109

However, according to McKinsey’s report on Digital insurance in 2018, most of the P&C, health, and life insurance innovations revolve around marketing and less towards product development and claims. This gives an idea of the scope of innovation in insurance.

Where insurtechs are focusing

What’s Next in Insurance: Disruption or Innovation?

The traditional insurance business is known to be resilient to technological advancements and innovations in terms of consumer-centric products. To stay relevant and competitive, insurers should shift focus from digitization to strategic disruption according to the changing market dynamics.

In fact, Insurers are willing to fund insurance startups to gain a first-mover advantage in terms of technology and innovations. These investments illustrate a clear goal of improving customer experiences and supporting their existing operations at the startups’ risk. 

For instance, “Axa provided seed funding for five European start-ups under a fund set up in France in 2013, before launching Axa Strategic Ventures in 2015. The €200 million ($223.47 million) venture capital fund has the mandate to invest in innovations in insurance..”. (OECD (2017), Technology and innovation in the insurance sector)

Innovation from Insurtechs has the potential to contribute to the insurance value chain; however, managing disruption is still quite a challenge. Disruption alters the business and behaviours in such a short span that most of the outcomes remain unanticipated. While innovation takes time to catch the stream, disruption can make or kill a business. The best is to blend incumbents’ years of experience with innovation from startups to bring an accountable disruption.

We’ve been solving critical front & back-office insurtech challenges through innovative technological solutions. Drop us a ‘hi’ at hello@mantralabsglobal.com to know more.

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The Essence of User-Centered Design: A Dive into Fundamental Principles

In a digital world where user experience reigns supreme, crafting designs that resonate has become a mission. Enter User-Centered Design (UCD), a philosophy placing users at the core of the creative process. In this exploration, we’ll delve into the fundamental principles of User-Centered Design and understand why they are the keystones of successful interfaces.

User-Centered Design

Introduction:

Imagine navigating a website seamlessly, effortlessly finding what you need. That experience is no accident but the result of intentional design. User-centered design (UCD) is the compass guiding designers toward creating interfaces that users not only navigate but embrace.

1. Empathy is Key:

  • Incorporate for a better approach: Start by stepping into the shoes of your users. What are their pain points? What delights them? By empathizing, designers gain insights that drive user-focused design decisions.

2. User Involvement Throughout the Design Process:

  • Real-life example or statistic: Apple’s iterative design process involves user testing at every stage. This constant involvement ensures that their products align precisely with user needs.

3. Holistic Approach to Design:

  • Visual content: Picture your design not as isolated screens but as a cohesive journey. Use diagrams to illustrate how each component fits into the larger user experience ecosystem.

4. Usability is Non-Negotiable:

  • Case studies or examples: Consider the success of Google’s homepage. Its simplicity and efficiency showcase the power of a user-centered approach, emphasizing usability.

5. Accessibility for All:

  • End with a clear call-to-action: Make your designs accessible. It’s not just a legal obligation; it’s an ethical imperative. Ensure your interfaces are usable by everyone, regardless of ability.

6. Consistency Across the Interface:

  • Formatting for readability: Consistency is not just a design principle; it’s a readability strategy. Use bullet points for clarity and short paragraphs for easy consumption.

7. Flexibility and Customization:

  • Inclusive language: Users are diverse, so should your designs be. Incorporate flexibility and customization options. This ensures your interface caters to a broad range of preferences.

Why User-Centered Design Matters:

A. Enhanced User Satisfaction:

  • Feedback mechanism: Prioritize user satisfaction. A satisfied user is an engaged user. Welcome reader input and questions to keep the conversation alive.

B. Reduced Learning Curve:

  • Clear call-to-action: Minimize frustration. Make your interfaces intuitive, reducing the learning curve. Invite users to explore with a clear call-to-action.

C. Increased Engagement and Retention:

  • Visual content: Engaging interfaces retain users. Visualize engagement with appealing images or infographics. Showcase how user-centered designs reduce bounce rates.

D. Effective Problem Solving:

  • Tangible proof: Case studies offer tangible proof. Explore how UCD’s iterative process allows for effective problem-solving. Real-world examples bring these concepts to life.

Conclusion:

In the grand tapestry of digital design, User-Centered Design is the thread weaving functionality, aesthetics, and user satisfaction into a seamless whole. By embracing these principles, designers transform mere interfaces into user-centric experiences. So, as you embark on your design journey, remember: User-centered design isn’t just a philosophy; it’s a commitment to excellence. Design with the user in mind, and success will follow.

About the Author: Mehul Chauhan is a seasoned Senior UI/UX Designer at Mantra Labs. With a deep understanding of design principles and a keen eye for detail, he brings creativity and innovation to every project he touches. When he’s not busy perfecting digital interfaces, you can find him seeking inspiration in art galleries or exploring the latest design trends across various industries.

Further Reading: Unveiling the Art of Emotional Design

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