Here’s an uncomfortable truth: the same user-centered design practices that built Apple, Google, Amazon and their peers into companies collectively worth over $10 trillion barely exist in insurance.
Executive Summary
The most valuable companies in history share one trait the insurance industry often ignores: a focus on user-centered design. With no design leadership at the top of their organizations, most insurance companies will continue to lag tech giants like Apple, Amazon, Google and Netflix, according to Haden Kirkpatrick, an innovation, corporate strategy, product and transformation executive serving the insurance, InsurTech and technology industries.Appointing a Chief Design Officer with P&L responsibility and direct CEO access is just one way to change this, Kirkpatrick advises.
In the first part of a two-part article series, he makes a case for increased focus on user-centered design in insurance, revealing metrics like a McKinsey Design Index, which proves that design drives shareholder returns.
In Part 2, Kirkpatrick addresses the excuse that insurance is inherently difficult to design, offering proof points that contradict this—revealing a handful of insurers that have made designing best-in-class customer experiences central to their operating models.
While tech companies obsess over customer journeys, prototype relentlessly and run thousands of experiments annually, most insurers still build products the same way they did in 1985—with actuaries in a room, regulators in their heads and customers as an afterthought (if at all).
Much of this gap goes back to the same cultural limitations we’ve discussed in prior articles on the yawning gaps in insurance innovation. User design sprints and UX testing methods generally have smaller sample sizes, which actuarially minded professionals don’t trust. And legacy thinking is a major culprit here. Design thinking was invented in the 1950s and ’60s but didn’t really take hold until David Kelley of IDEO took it to industrial scale in the early 2000s.
If you’ve worked at a legacy carrier for 30-35 years, the companies listed above have been born, scaled and grown using these techniques, and they are now worth many multiples of your enterprise value. The “that’s not how we do things here” mentality is unacceptable in general, but it is especially damning when it comes to user-centered design practices.
The evidence of what this costs is hiding in plain sight:
Long-term analyses from Design Management Institute published in 2015 revealed that design-led companies outperformed the S&P 500 by over 210% over the course of a decade, on average. (2015 DMI analysis) Top-quartile design performers achieved 32% higher revenue growth and 56% higher total returns to shareholders, according to McKinsey’s 2018 report, “The business value of design.” Every dollar invested in UX returns approximately $100 in value, according to a 2016 Forrester report. That 9,900% ROI dwarfs most capital expense allocation decisions.
