Protection 3.0: the impossible dream

Protection 3.0 offers comprehensive wellbeing: a significant evolution to the way protection products, such as life insurance, critical illness cover, and income protection, are conceived and offered.

Wellbeing boosts engagement and encourages relationships and collaboration. Importantly it builds trust with members. This facilitates the positioning of protection cover and makes a positive “buy” response more likely.

Where this article fits

This Protection 3.0 article brings everything together into a people-centred insurer proposition.

The membership article argues that the nature of mutual membership should be reviewed. We suggest an enhanced membership offering would appeal to a wider demographic, foster long-term engagement and differentiate mutual versus proprietary insurers.

The engagement article suggests there is a major problem with lack of engagement of potential and actual customers with protection. We explain why the current protection offering and thinking means non-engagement is inevitable – almost mathematically so.

The wellbeing article suggests one solution. A comprehensive wellbeing proposition has engagement designed in from outset. The real question: will protection insurers be involved?

High level summary

Engagement with protection

A significant challenge for all protection insurers is the lack of initial and ongoing engagement with protection. This results in fewer buyers and lower customer retention rates than we’d like.

Protection 3.0 aims to address this with an insurer-backed proposition which is simply more relevant to potential buyers of protection and existing policyholders: wellbeing-led and member-focused.

Wellbeing as natural engagement

Individuals are naturally engaged with their wellbeing, even without purchasing a product. Insurers can capitalize on this by creating and collating research-backed information related to wellbeing. This should foster pre-sale and ongoing engagement and build stronger relationships with members.

I was a long-term wellbeing skeptic, but the underlying science made me a convert.

Leveraging relationships and collaboration

The World Health Organisation (WHO) recognized as early as 1946 that health is about a positive presence, not just the absence of negatives:

Health is a state of complete physical, mental and social wellbeing and not merely the absence of disease or infirmity. Source: First principle of WHO (1946).

Relationships and achievement lie at the heart of modern wellbeing models. They are key to the flourishing of individuals and society.

The original scientific purpose of a lever was to amplify force, allowing a smaller force to lift or move a heavier load. Similarly in literature, keys frequently represent the unlocking of mysteries, solutions to problems, or the revelation of hidden truths.

Research suggests that building and leveraging relationships and collaboration is the key to personal and corporate achievement. It makes a strong contribution to wellbeing too.

The mutual opportunity

The status quo should be deeply unattractive to protection-focused mutual insurers. A common view among consultants and reinsurers is that only Royal London and Scottish Friendly may survive long-term. Nonetheless, messages in accounts are usually positive, even as cash drains.

There are paths to growth, including a wider product offering. Value and cash challenges can be solved, more easily than you’d think. But the big opportunity is a different member offer, playing to a mutual’s ethos and strengths, rather than mimicking added value benefits.

The Protection 3.0 emphasis on wellbeing and collaboration sits well with mutuality. Membership should be about the sense of community and purpose, building what Aristotle called “the good life”. Insurers and their members can get protection and much more.

Reprise: before Protection 3.0

The table shows where the protection market has been, is now and should move to. The meaning of colour may be obvious, but for more explanation try reading Protection 2.0.

Protection 1.0 product ranges were limited. Proprietary companies offered no added value benefits to their policyholders, while some mutuals offered socially-focused membership. Perhaps we should also include under “1.0 - past” many societies who do not offer regulated financial products.

Protection 2.0 was started by Scottish Provident, with its protection menu. L&G followed, with a focus on underwriting, price and analytics. Added value benefits became common, with alternatives to the more social emphasis of traditional mutuals.

Protection 3.0: more detail

Membership

Read the longer membership article.

There’s an opportunity for all, but especially for mutuals. What makes membership 3.0 different? A mutual (or indeed proprietary firm) offering this will:

Create trust. It’s not about cross selling to existing members. Overall trust in financial services has been compromised, perhaps because of bank behaviour. Closer to the protection space, general insurers have engaged in price walking, banned in 2021.

We can start regaining that trust by offering prospective customers something for nothing. Done smartly it doesn’t have to cost insurers much; the input mainly comes from “users”.

Make it work for each member. While there might be significant giving back – see below – the focus is on members’ needs and aspirations, not charity or fundraising. There is nothing preventing offline communities developing, with all the benefits of traditional membership.

Encourage collaborative magic. Collaboration converts members’ goodwill into value. Many online communities demonstrate that people are very giving. Internet technology is a facilitator, scaling up the network; you are no longer constrained by physical location.

Let the member community drive. One step better than customer-driven, people collaborate on areas important to them, revealing their true needs. This will reveal true wellbeing, rather than a narrower focus on health and financial wellbeing, important though they are.

Read the longer membership article.

Engagement

Read the longer engagement article.

Non-engagement – more simply lack of interest – is the central problem for protection. Worse, the problem arises from the very nature of protection.

In terms of psychology, protection is about unpleasant events – sometimes catastrophes. Generally people would rather not think about that. Among those who do think about uncomfortable possibilities and even buy protection, it’s hardly something to celebrate or bring to mind.

“General insurance protects against the everyday. Our product is best understood as catastrophe insurance: consumers generally buy it reluctantly and begrudgingly.”
Source: Lifesearch report

More technically and perhaps more problematically, protection pays out on unlikely events. The events’ unlikeliness means we don’t (and shouldn’t!) spend all our time thinking about or planning for them. But conventional protection is still important for any right thinking person.

It’s logically absurd for people to spend much time thinking about such unlikely events. The inevitable consequence is non-engagement with protection. This is a big hurdle to overcome and I don’t believe current efforts will get close.

Initiatives to boost engagement

Three initiatives are used to boost consumers engagement with protection:

1. Added values services are the least effective, for reasons in the table.
2. Sales and advice techniques are worthwhile, boosting applications.
3. Marketing by intermediaries have potential to boost enquiries.

The effectiveness of these initiatives remains uncertain and may fall short of our aspirations. They are unlikely to foster ongoing and pre-lead engagement with protection. For this we need strategies that create a strong, social proof-driven desire for protection, where individuals actively seek it out because they see their peers benefiting and endorsing it enthusiastically.

Let me be clear: excellent messaging through social media, avoiding any poor practices offering (e.g.) “free life insurance” has to be good and will result in more enquiries. But I can’t see that even the best storytelling and statistics will be enough: the subject is just not attractive.

To boost ongoing engagement we need to change the nature of protection.

Read the longer engagement article.

Wellbeing

Read the longer wellbeing article.

For years I struggled with the concept of wellbeing. What was it? Who and what was it good for? Could it help someone without any apparent mental or physical challenges? Could it be personal business as usual? Given the link to mental health, could it even be a part of a protection proposition?

My research in Q2 2024 told me I’d missed a trick. Wellbeing is not just the terrain of counsellors, psychotherapists and those with a preference for a DIY approach to managing their mental health. I learned that there were formal set ups and models for wellbeing. It’s backed by real science.

The sections of my stand alone wellbeing article are indicated by bold text below.

Serious science is the background to wellbeing models. They arrived in the late 1990s with invention of Positive Psychology by Martin Seligman and Mihaly Csikszentmihalyi, the inventor of the “flow” concept. The foundational paper was Positive Psychology: an Introduction (2000).

There are various theories and components of wellbeing. PERMA is one famous model. Practical wellbeing resources now abound and are useful when their credentials and claims are checked against research and common sense (is it too good to be true?)

Research suggests that mental health and mental illness are not extremes on the same continuum, but rather two distinct dimensions. Scores of studies into wellbeing and physical health link positive wellbeing to improved longevity, CVD, CHD and stress outcomes.

Read the longer wellbeing article.

Doing wellbeing-centred membership

I am conscious that the receding sections of this article may at times seem like generalities, lacking edge. More detail is provided in the articles on engagement, membership and wellbeing, but it’s fair to ask: “if a group was committed to wellbeing how would they do it?”

Here’s one structured approach to developing such a program, based on the PERMA model:

Integration of the PERMA model

Positive emotions. Offer activities that promote positive emotions such as happiness, gratitude, and contentment. Examples include mindfulness sessions, gratitude journals, and positive psychology workshops. Obvious point: much already exists – don’t re-invent the wheel.

Engagement (a.k.a. flow). Provide opportunities for members to engage in activities that match their interests and strengths. This can include hobby groups, online courses, and skill-building workshops. Again, a lot of material already exists. Some is outstanding.

Relationships. Facilitate the building of meaningful relationships through community events, networking opportunities and support groups. Create online platforms for members to connect and support each other, extending from the most needy to the most able – see achievement.

Meaning. Help members find purpose and meaning through volunteer opportunities, mentoring programs, and involvement in social causes that align with their values. There is no doubt that this element has the greatest potential to backfire e.g. via religious affiliation. Take care!

Achievement. Encourage goal setting and celebrate accomplishments through personal development plans, accountability and recognition programs. My (perhaps naive) view is that, linked to relationships, this is one of the best approaches to tackling big challenges.

An underlying model gives edge to wellbeing – the edge I was seeking in Q2 2024 – but there are many aspects to a wellbeing programme beyond the model. Let’s turn to them, noting again that in many areas there is no need to start from scratch.

Program design and implementation

Member onboarding. Introduce new members to the program with a comprehensive onboarding process that explains the PERMA model and its benefits. Offer initial assessments to help members identify areas of focus.

Regular engagement activities. Schedule regular activities and events that align with the PERMA elements. This could include weekly webinars, monthly challenges, and annual retreats focused on different aspects of wellbeing.

Personalized wellbeing plans. Develop personalized plans for members based on their initial assessments. Offer tools and resources to track progress and make adjustments as needed.

Digital tools and platforms

Mobile app. Create a mobile app that provides access to resources, tracks progress, and facilitates engagement. Include features like daily wellbeing tips, activity trackers, and community forums.

Online resources. Offer a library of online resources such as articles, videos, and courses on topics related to the PERMA model and overall wellbeing.

Partnerships and collaborations

Expert collaborations. Partner with experts in positive psychology, mental health, and wellness to provide high-quality content and workshops. Much useful material already exists.

Local community partners. Collaborate with local businesses, fitness centers, and wellness providers to offer discounts and exclusive access to services for members.

Monitoring and evaluation

Feedback mechanisms. Implement regular feedback mechanisms such as surveys and focus groups to gather insights from members and make improvements.

Wellbeing metrics. Track key metrics related to member wellbeing and engagement. Use this data to demonstrate the program’s impact and refine offerings.

Communication and marketing

Value proposition. Clearly communicate the benefits of the program, emphasizing the holistic approach to wellbeing and its evidence-based foundation.

Engaging content. Use engaging content across various channels (social media, newsletters, blogs) to keep members informed and motivated.

The insurer role

If insurers are not pushing their own interests how do they contribute? I suggest that this comes through collaboration (said to be an easy fit with mutuality), curation and creation.

Collaboration

Collaboration between individuals can be encouraged and supported by providing websites and forums for online communities needs. Once again this is not (just) about providing support for those whose wellbeing is deteriorating, but boosting wellbeing for those who are “fine”.

Collaboration with experts was highlighted above as a means to avoid re-inventing the wheel and to benefit from others’ expertise. Clearly such collaboration needs to work for both parties, rather than being tilted only towards an insurer’s interests.

Collaboration between insurers – especially mutuals – could also be helpful. For example a few providers have expertise with physical meetups.

Curation

The curation role is particularly important. Care needs to be taken to ensure that curation is not simply playing to insurers’ agendas, but that itself can be overseen by other community members to ensure quality. The wisdom of crowds.

Content and creators can be moderated to ensure quality and respect, although some of this can be done through clever self-policing. Members are not anonymous, which also helps.

But this is not the biggest role for for curation. Instead insurers can learn from and curate the hundreds of resources already in existence, including scientific papers.

Curation examples

As an example of curation and building expertise an insurer could highlight and take forward the ideas in Pursuing Happiness: The Architecture of Sustainable Change.

This academic paper covers the important concept of hedonic adaption and the 50 / 10 / 40 rule: 50% of happiness is genetics, 10% is circumstances and 40% is intentional activity under our control. Author Sonja Lyubomirsky took this further in her book The How of Happiness.

The impact of the 50% is less fixed than you’d think from the genetics label.

Lyubomirsky starts with a dramatic example on page 57. Phenylketonuria (PKU) is entirely genetically determined and, without treatment, results in mental retardation and premature death.

But ensuring the carrier’s diet is free from the amino acid phenylalanine (found in eggs, milk, bananas and NutraSweet) may entirely prevent brain damage.

The on page 58 Lyubomirsky notes that depression in associated with 5-HTTLPR, a “polymorphic region” or segment of DNA in the serotonin transporter gene (SLC6A4). This gene regulates the reuptake of serotonin, which plays a key role in mood regulation.

5-HTTLPR has two main variants (alleles): individuals with one of more of the short allele (S) tend to have lower levels of serotonin reuptake compared to those with (L).

The 2003 paper Influence of Life Stress on Depression tracked 847 infants in New Zealand and found that more than half carried the short allele. The study found that it was only the unlucky half whose stressful experiences led to depression, even for those maltreated in childhood.

She then makes a perhaps belatedly obvious point – and certainly one familiar to risk managers.

If the New Zealanders with the short “bad” allele were able to avoid highly stressful situations or to enagge a physiotherapist or supportive confidante when they anticipated stress, their genetic propensity for depression may never have been triggered.
Source: The How of Happiness page 60.

She concludes with:

No matter what your genetic predisposition, whether or not that predisposition is expressed is in your hands. Source: The How of Happiness page 60.

Bottom line: you can’t change your genetics but you can change likely outcomes. All seems so obvious. It makes you wonder how the 50/10/40 split can even be measured.

But isn’t there more? Example of boosting happiness are in the activities (40%) group and techniques are suggested that avoid the hedonic adaption effect. But there appears to be no obvious limit on the happiness (wellbeing) generated as a result. What does the 40 limit even mean?

Creation

Building a second brain (BASB) is a method focused on capturing, organizing, and retrieving information to enhance productivity and creativity. Its structured approach reduces cognitive load and stress, boosting wellbeing. BASB is especially advocated by (e.g.) Tiago Forte.

Generally the BASB concept is used by individuals to help reduce information overload, manage time and prioritize, retain knowledge (mainly in the second brain!) and assist in personal development.

With sharing tools now available and effective curation, a collective or group-like second brain can be built. This could provide differentiation for a mutual and demonstrate a commitment to members’ holistic wellbeing and personal development. Here’s a Beginner’s Guide to BASB.

Creating GPTs could be a good way to reinforce, complement and generalise the BASB concept. I’ll say nothing more, as this is a research and production area for me, as is BASB.

Conclusion

Developing a comprehensive wellbeing proposition should be attractive to protection insurers:

It boosts engagement. People are naturally engaged with their wellbeing and might welcome this being put on a more formal basis e.g. via research.

It encourages building relationships, collaboration and subsequent achievement. This is central to modern wellbeing models and aligns well with a mutual’s ethos and strengths.

It builds trust and stronger relationships with members. This is because the insurer gives so much for so little; this could, for example, be a free offering for existing members.

Having built trust, a well-crafted message that integrates well-being and protection cover is likely to resonate positively with potential members. Positioning protection cover as an essential component of a comprehensive wellbeing strategy makes a positive “buy” response is more likely.

Appendix: creating a forum

Insurers have their own IT departments. This have their own ideas and capabilities, which may or may not run to building customer-led forums at scale and at reasonable cost. This appendix hints at a simple and experimental approach which might be tested on your own staff.

Discourse is a well known provider of open source community forum software, enabling you to self-host forums. But Discourse also hosts, builds, and customizes communities for over 3000 customers currently, including forums for Motley Fool, for example.

Pricing seems good. Comparisons and limited reviews raised no concerns for me. The open source underpin, a new user guide and the following commitment gave this amateur significant comfort:

Can I switch to a different host? Your data always belongs to you. Back up all your Discourse data right from your web browser, any time. Migrate to or from any cloud provider with ease. Source: Discourse pricing page

Bottom line: as expected, the technology is already there.