How insurers can help customers achieve financial well-being

With broad product offerings and large amounts of high-value data, insurance companies can help consumers achieve financial well-being.

Financial stress may be the most damaging type of stress. A National Institutes of Health study showed that people with more debt face greater risk of depression and high blood pressure.

That’s a potential vicious circle; health events can cause financial problems that can further deteriorate our sense of financial well-being (through huge health care expenses, for example). Some financial services providers aim to provide solutions that improve health (think of health and life insurers trying to promote healthy behaviors through the use of fitness trackers). Even those that don’t should be aware of and concerned about the potential risk of physical illness harming financial well-being.

However, the problem is hitting their bottom lines fast, in the form of increased absenteeism, tardiness and lost productivity. Employers recognize that stressed and depressed workers are not productive. The scope and severity of the problem are becoming clearer, according to
a series of recent studies.

• A 2018 study from employee benefits firm Neybert found that 35% of employees have been stressed by money concerns in the last year. 10% have been unable to focus while working, and 6% have missed work.
• In 2017, research from Willis Towers Watson concluded that nearly half (48%) of US workers worry about their current financial situation and even more (59%) feel stress when considering their future financial outlook.
• A 2016 poll from Harris Interactive revealed that 37% of employees manage their finances at work, with more than a third of those spending up to three hours weekly dealing with their finances.

The path forward to financial well-being

It’s clear that the financial services industry — and insurers in particular — have a role to play. It’s just as clear that previous efforts haven’t paid off fully, which means a new approach is necessary. Financial education has been around for years but hasn’t fundamentally changed behaviors. As important as financial literacy is, it’s not enough by itself to increase the general sense of financial well-being or move large numbers of consumers closer to their goals. It’s clear that insurers — as well as retirement firms and wealth managers — should focus on a more integrated and holistic approach that addresses the components of financial well-being and that has a chance at changing behaviors.

The question is, how do traditional players who are capable of providing solutions for many elements of financial well-being through their savings, investments and protection products develop an approach that takes a comprehensive view and actually helps change consumer behavior?

Recommended actions: what insurers should do now

• Develop a proprietary, multi-factor analytical model that determines financial well-being from the customer point of view, especially to the moments that matter in their lives.
• Understand customers’ financial stressors and review existing portfolios and the new product pipeline for those that can specifically address these issues.
• Adopt “evolutionary” and “revolutionary” in designing new products and experiences — that is, evolve existing products through simplification and basic enhancements and innovate boldly with new product types (e.g., portable group policies) and embrace digital transformation to offer entirely new experiences.
• Develop digital tools based on artificial intelligence and other advanced technologies but surround them with a human element, such as real-time access to financial advisors or customer service agents via phone or live chat. 
• Develop a platform strategy, recognizing that platforms designed to promote financial well-being may need to incorporate multiple external parties, including other financial services providers.
• Develop an integrated brand and marketing strategy to effectively communicate and drive demand.
• Design and build the necessary technology architecture, which likely requires digitizing legacy systems so next-generation tools and apps can be deployed.
• Orient all touchpoints around trust and transparency. It’s not enough to simply secure channels, assets and data and be compliant. To build trust, insurers must also share information transparently (like digital leaders in other sectors) and deliver high-quality, personalized experiences.