This morning has ended up being all about CIGNA, who have revealed themselves to be the third recipient of a robo-advice exemption, and the first for a life insurer. Firstly, congratulations to CIGNA, and Vince Warnock and his team who have achieved the work necessary to obtain an exemption. I know it is significant.
Robo-advice for investments has been around for quite some time. Essentially, it follows a simple path. Advertise, the client comes to a company website. The process of deciding whether investment is the right thing for this client is ignored, or whether this company is right, is ignored in this limited advice process. The questions addressed by the robot are usually: how much to save? Into which funds?
Digital advice for insurance has yet to settle into such dismal conformity - or much practical utility. It is still a confusion of ideas about what needs to meet, how to manage conflicting demands, budget allocation, product selections, and interactions with other services. Picking through these decisions requires skill in understanding both the consumer purchase process, the risks consumers face, how insurance forms part of their wider financial life, and how to make the trade-offs. In a world where we seek to make decisions that are evidence-based, data must underpin each offer and choice. Then it must all be made simple, and attractive. For every digital advice offer for insurance for the next few years, it will be fascinating to see how each resolves those issues.
Strategically, look at it like this: in a few years most, if not all, insurers will have a digital offer. So how is your preparation for digital going?
Here are the details of CIGNA's announcement:
"Cigna Insurance receives approval to offer robo-advice
Cigna Insurance is excited to announce it’s been granted exemption from the Financial Markets Authority to offer digital or robo-advice to its customers.
Cigna Head of Marketing Vince Warnock says the insurance industry is facing a period of change, with customers expecting more from providers; and rightly so.
“This is an exciting time for us, as it gives us the mandate to ensure we’re delivering to our customers’ expectations. Robo-advice is going to change the landscape for the insurance industry and importantly give consumers another choice on how they want to receive their financial advice, Warnock says.
“This is a big opportunity for Cigna to now work on building a service that will not only help consumers but help empower financial advisors. Together this will give us a real opportunity to help solve the high underinsurance levels of New Zealanders, and make sure New Zealanders have the financial protection they need, when it’s needed.”
In its decision the Financial Markets Authority said it was satisfied Cigna’s application for exemption demonstrated its directors and senior managers meet good character requirements and had the capability and competency to provide personalised services to retail clients through its digital advice facility."