Gamification in Insurance: Playing to Win

By Kaenan Hertz | September 19, 2016

Among the many innovations happening in the insurance industry today, gamification is surely one of the more interesting.

At the nexus of trends ranging from behavioral science and social networking to the Internet of Things and wearable tech, gamification is a powerful lever for insurers and insurance agents seeking to enrich digital experiences and adopt new customer-centric business models, such as pay-as-you-live offerings.

Gamification involves the use of game techniques and elements to influence the behaviors of individuals. The use cases are many and diverse, but most involve prizes and points, competition and/or teamwork and scorekeeping to motivate people to meet specific goals.

Agents’ first experiences with gamification may come through carrier “agent engagement” initiatives that offer competition and rewards for selling new products that go beyond traditional contests. Incentives for completing product education cycles, issuing policies faster, updating customer data more frequently, providing more information for reports or for complying with new policies may also factor into gamified experiences for agents.

Gamification involves the use of game techniques and elements to influence the behaviors of individuals.

Agents should also recognize how gamification may help them engage with their own customers.

The winning combination provides agents and insurers with the right gamification approach, on the right device, at the right time. This will help them to improve internal processes and engage more proactively with clients.

For this to happen, agents and insurers need to focus their use of gamification on the areas where there is a common goal towards change – either in processes or behaviors – that has proved difficult to achieve. By designing the right gamified incentives, insurers and agents can save time and effort so they can focus on improving efficiencies and raising returns.

Why Gamification Matters

Within insurance, gamification offers the greatest potential value in the realm of consumer engagement. Among early adopters, it has emerged as a useful practice and effective means to:

  • Transform ordinary tasks into interesting and fun experiences that keep users coming back
  • Strengthen brand awareness, affinity and penetration
  • Educate customers about product suitability and guide them to purchase
  • Motivate people to act in areas such as health and wellness, safe driving, financial planning and sustainability

Certainly agents stand to benefit from closer relationships with their customers, and gamification can be a good way to set up more regular interactions. For those agents who are seeking to move more interactions to digital channels, gamification can be a boon. Applications, policy renewal forms and information updates are all areas where gamification can help agents provide a better experience for their customers.

More frequent interactions and richer experiences are especially important to millennials, who have shown little interest in life insurance and has higher expectations for digital channels. Through gamification, insurers can demonstrate their understanding of millennials’ needs and preferences. More importantly, insurers can present a more positive and compelling value proposition.

Designing Compelling Games and Experiences

It is important to recognize how gamification influences behavior. Drawing upon extensive research into human psychology, the most effective games leverage our natural desire to feel good and induce the release of dopamine, a neurotransmitter that motivates people to act. Therefore, game experiences must be fun and motivating, with both extrinsic and intrinsic rewards.

The ideal mix of rewards will be customizable, for the simple reason that different people are motivated differently. For instance, competition positively motivates some people, but does not appeal to others. The best techniques for encouraging older policyholders to exercise will naturally vary from those that entice millennials to drive more safely.

Beyond attractive rewards, other hallmarks of effective games include:

  • Simple cues for action and clear feedback
  • Easily identifiable markers of progress and paths for advancement
  • Intuitive user interfaces

Gamification in Action

The first generation of insurance adopters shows the many viable applications of gamification:

  • A global insurer has built a comprehensive online wellness program around gamification, with personal challenges around preventive care or disease management, which has increased customer retention, generated valuable risk and behavior data, and enriched customer relationships.
  • The rapid growth of a U.K. firm with four million insured drivers between ages 17 and 25 has been driven by a quasi-gamified usage-based insurance model that monitors driving, provides consistent feedbacks and offers premium discounts for safe driving.
  • A Canadian insurer has significantly increased customer engagement with a younger customer segment through a gamified app that requires players to demonstrate knowledge of investment and retirement planning principles.
  • An insurer in the United States applied gamification to its claim scheduling process, with employees rewarded for submitting innovative solutions to common problems, with nearly $20 million saved through efficiency gains.

Winning with Gamification

Insurers and agents interested in gamification should be encouraged by the experiences of early adopters, which have clearly demonstrated that relatively limited investments and focused pilot programs can yield tangible returns. There are a number of questions to consider:

  • The alignment of games to digital strategy and broader transformation initiatives, such as pay-as-you-live models or customer engagement
  • The right use case for the right business issue and right customer niche, including the optimal balance of simplicity and sophistication in game design
  • Testing, learning and iterating to gain a deeper understanding of customer needs and behaviors
  • The right team, including internal functions (IT, product development, underwriting, sales) and specialists (data scientists and game designers)
  • Knowledge of relevant rules and regulations, especially around risk pooling and data privacy and labor laws for games involving employees
  • Collaboration with external partners or service providers

Insurers and agents should also explore opportunities to leverage and share the data that a gamification strategy will be able to produce. Agents should use that data to improve processes and customer relationships. Insurers should leverage that same data to develop an accurate view of agents’ and policyholders’ behaviors, continuing to tailor their gamification approach to make it more effective.

Further, agents should recognize how carrier programs can help them increase internal efficiencies and with consumer education, a focus on particular customer segments or use of digital service channels. In other words, this is a game agents will play with both carriers and policyholders, with potential wins for all.

The Bottom Line: Insurers Get in the Game

Given that early adopters have fully operationalized gamification, it is clear that gamification is here to stay for the insurance industry. There are clear and tangible benefits in terms of customer engagement and bottom-line impact, and direct alignment with pressing imperatives regarding customer centricity and engagement. In this sense, gamification is a game that insurers must play.

About Kaenan Hertz

Hertz is executive director at Ernst & Young LLP. Phone: (917) 288-2530.

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Insurance Journal West September 19, 2016
September 19, 2016
Insurance Journal West Magazine

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