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Five principles for the future of protection

Customer-centric innovation, personalization, trust and data sharing are powerful concepts that play a critical role in shaping the future of protection.

In brief

  • Evolving customer expectations are driving the need for new insurance product innovation.
  • In the future, insurers will holistically provide all protection needs for their customers under one contract for one price.

David Connolly, EY Global Insurance Technology Leader, discussed the future of protection with Chetan Kandhari, Nationwide’s Chief Innovation and Digital Officer, at the EY Insurance Executive Forum. Below are a few key takeaways that explore how insurers can innovate their offerings.

1. Integration and bundling evolve into individualized, one-price protections

The practice of bundling home and auto insurance with additional complementary coverages has proven very effective in attracting and retaining customers. In the future, forward-looking insurers will build on that fundamental platform by holistically providing all of the protection needs for their customers under one contract for one price.


That means combining coverages for property and casualty, life and health insurance with income protection, side-hustle and home-based businesses into individualized protection contracts. By reorienting around customer needs, such offerings that combine products and services are a major advancement from today’s bundled policies.


These protection policies will be fully individualized, with underwriting based on real-time behavioral data, not broadly personalized based on static historical data sets. Insurers may lead or participate in ecosystems to deliver the protection products consumers want, but insurers don’t individually offer.


2. Emotional benefits trump functional benefits by building trust


Everybody in the industry agrees that the future of insurance will be data-driven and analytics-enabled. But tomorrow’s top-performing insurers will also excel at making human connections and applying the personal touch at the right time. To a large extent, this is about empathizing deeply with customers. That means dedicating people and teams to understanding not only what customers might buy from you but also how they feel and what they value most in life.


Research shows that consumers value a sense of feeling protected. To deliver that powerful outcome, insurers will need to retrain customers who tend to focus on price, thanks largely to billions of dollars of industry advertising. Appealing to higher-order needs may give insurers back some pricing power.


That level of empathy is critical if insurers are to address one of their biggest barriers to innovation: lack of consumer trust. Consider all the deeply personal information consumers are comfortable sharing with their wealth advisors — all of their financial data and hopes and dreams. Now think about what insurers could do with such data — precision risk profiling, targeted pricing, lifetime customer value modeling, and tips for better living.


Insurers that can dial-up trust with their customers will have a huge competitive advantage during a period of substantial change and intense competition. 

3. Innovation takes courage and conviction (plus patience)

The big ideas that will fuel breakthrough innovations are not generated overnight. And they don’t typically produce results in the first three months. Innovation is the ultimate long-term process, with ROI models that might extend across five- or 10-year payback cycles. Insurers know they need to develop a strong innovation engine but may be challenged to retain focus and urgency in the face of near-term pressures.

That pressure will come from results-focused capital markets, which have never been known for their patience. But also from fears — sometimes justified — of cannibalizing core businesses. In the face of these challenges, insurers must articulate a clear vision for their top innovation priorities and back them up with strong leadership commitment and sufficient resourcing. If it was easy, it wouldn’t be innovation. And the upside for firms that master innovation more than justifies the hard work and significant investment.

4. Shifting consumer needs are reshaping the industry’s future now

More individualized protection is particularly important today because of the widespread lifestyle changes that are having a major impact on the risks consumers face and the protections they most want. The pandemic opened many people’s eyes to the need to protect more of their lifestyles, including unexpected hospitalization, job loss or loss of income.

But even before COVID-19, more individuals were looking for different types of protections, such as automotive policies that worked for both personal usage and driving Uber shifts, or home policies that covered short-term rentals as well as the usual protections for fire, storm damage and break-ins. The tricky part about personalization is that it’s different for every individual. Individualization — based on experiences and products that have to be personalized in specific ways — should be the target for insurers looking to innovate.

5. Customer-centric innovation exists in many forms 

For years, industry leaders have worried about low levels of consumer engagement. Insurers are in touch with premium reminders once or twice a year and hear from customers only if something goes wrong and they initiate a process no one wants to go through. Insurers that want more engagement will need to clarify the benefits to customers and how they will offer value (e.g., tips for risk prevention, healthier living, offers for ancillary services).

But more engagement isn’t necessarily the right answer for every insurer — less engagement might work well for insurers with strategies that prioritize accessing customers via ecosystems, embedded, white-label offerings and other channel partnerships.

Whichever route their innovation journey takes, insurers should think big, start small and embrace test-and-learn approaches. That includes involving consumers in the innovation process. Ongoing research and monitoring are vital to understanding what customers want. Testing prototypes is key, too, because customer reactions to new products and services can differ significantly from what they say about them in theory.


Innovation, personalization, and data sharing are key concepts that play a critical role in shaping the future of protection.

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