Gamification in the insurance industry

Unless you’ve been hiding under a rock for the past few years, you’ll have a pretty good idea of what gamification is. It involves the use of game design elements and mechanics in non-gaming contexts to engage, motivate and influence by making complex concepts and formal processes fun and interactive.

The mechanics of gamification

Design: components such as challenges, badges, points and leaderboards.

Technology: AI, mobile app gamification, wearables and Virtual Reality/Augmented Reality

Psychology: gamification in business can influence behaviour through competition, achievement and recognition.

We see gamification examples in the marketing of major brands like Nike, Pizza Hut and Gucci, but while it’s relatively easy to build this into the promotion of consumer products it can be more of a challenge when it comes to using gamification in finance. 

Insurance is one of the most effective financial protections available to individuals, protecting their possessions, their homes, their health, their income and their families. But no matter how important it may be, it’s not attractive. It doesn’t have the appeal of luxury goods. Its selling point is essentially utilitarian, but gamification can help to change its image.

Digital transformation is changing the way insurance is marketed, sold and managed. Embedded insurance– whereby the insurance products are integrated into the customer journeys of non-insurance companies – lends itself perfectly to the adoption of gamification. This presents considerable opportunities both to insurers and to their distribution partners who are embracing embedded insurance.

Key objectives of gamification

Gamification is a highly versatile concept with varied applications that can benefit both consumers and businesses.

Raise consumer awareness and understanding

Improving public understanding of the benefits and mechanics of insurance is crucial in changing behaviour. People are often resistant to the idea of insurance, perhaps because they don’t appreciate its value or they are reluctant to pay for it. Gamification can translate its benefits into more easily appreciated terms, emphasise its importance and demystify its procedures.

Gamification for customer engagement

Gamification introduces elements of entertainment into a very dry arena, with competitions, challenges and rewards turning the process into something enjoyable. It may never become as compulsive as Candy Crush or Royal Match, but it can certainly promote consistent engagement.

Encourage safer behaviour

Insurance is based on the mitigation of risk and gamification techniques can encourage safer behaviour in areas such as driving and, in the case of life and income protection insurance, healthier living.

Humanise the experience

Insurance companies face a constant battle against the public’s perception of monolithic companies with spreadsheets in place of souls. Gamification is an effective way of demonstrating that insurance is provided by human beings who have a sense of humour and an appetite for fun.

Improve policyholder retention

Customer retention is a permanent challenge for any business. The highly competitive world of insurance is no different. That’s one reason why insurers offer incentives in the form of discounts and free extras to promote loyalty. Gamification is a valuable part of this strategy – customers who engage with the product and the company in a gaming relationship are just that little bit less likely to think of taking their custom elsewhere.

Motor insurers use apps that score drivers on their performance and those with the highest scores can win premium discounts.

Life insurance providers encourage policyholders to complete wellness activities like exercise for which they win tokens redeemable for shopping vouchers.

Virtual insurance games educate customers about the value of insurance products by constructing problem scenarios in which players must work out the most appropriate insurance strategy.

Policy renewals are turned into interactive experiences using game mechanics that give users a sense of personal involvement.

Digital financial games can help promote financial literacy and responsibility.

Life and income protection insurance

These kinds of protection insurance are designed to give financial support in times of hardship rather than covering loss of or damage to possessions. That means its gamification can’t be connected to the use of tangible things but instead needs to be related to issues like health and lifestyle. Some of the approaches insurers can take include:

• Rewarding customers with points for exercising, tracking steps and making healthy choices. Points could be turned into monetary benefits like shopping vouchers
• Offering discounts and enhanced benefits for maintaining a healthy lifestyle.
• Gamifying the onboarding process to make it feel like less of a box-ticking exercise.
• Creating a sense of belonging through membership of a virtual community of policyholders.
• Gaming techniques to incentivise customers to make referrals and spread word-of-mouth recommendation.

These are just some of the measures that Eleos is incorporating into its income protection and life insurance customer experience.

Get your head in the game

Put the fun into financial security

Inevitably, any development in the application of digital technology to the customer experience presents areas of concern.

Data privacy 

Customers may be wary of constant tracking of their behaviour, so they’ll need reassurance that it’s strictly limited to the needs of the game-playing.

Fairness and accessibility

The digitally literate may be very familiar with gaming, but it’s important not to exclude people to whom it’s still quite alien. Older customers may find it challenging to engage in gamified processes unless they’re given a thorough understanding of how it works and what it offers. 

Regulatory hurdles

As the rules covering data collection and incentive schemes become stricter, gamification must be introduced and developed in line with the compliance requirements of GDPR and CCPA.

Over-reliance on gamification

There’s always the danger of becoming the victim of your own success. If your gamification customer experience becomes popular you should be aware of the negative impact of withdrawing any of the gaming aspects – not least the rewards you offer. If their experience diminishes you could see a drop in engagement.

Like everything digital in the insurance sector, gamification is evolving rapidly. So what can we expect to see coming down the track? Here are three of the developments to watch out for.

AI and machine learning

Customers who respond well to gamification will probably want more and better. AI offers the chance of dynamic gamification which will evolve according to an individual’s behaviour, making the experience more personalised as their engagement progresses.

Wearable tech

As consumers increasingly adopt wearable technology, insurers can gather real-time health data that can enable them to adjust premiums. They could also introduce VR simulations to demonstrate risk and encourage preparedness.

Blockchain

Blockchain technology isn’t the easiest concept to explain to consumers, but they don’t need to look under the bonnet in order to get its benefits. Originally developed in the field of cryptocurrency, it’s rapidly spreading into sectors like finance and healthcare. For insurers it offers the potential for blockchain-based rewards and loyalty programs.

It’s a truism to say it, but gamification is reshaping the insurance industry. Not only does it represent a way of humanising and demystifying its arcane and impersonal image, it can also transform the entire process into something enjoyable.

However, it’s important not to lose sight of the need to balance the advantages of engagement with ethical concerns and to avoid an over-reliance that may become self-defeating. Ultimately, insurers need to conduct their experiments in gamification with the same responsibility and inclusivity they apply to all other elements of their product development and customer service.