Queenie Chow, Lisa Morgan and Barbara Chesire-Chabbaga explain the concept of human-centred design and how it has been used in the public and private insurance sectors
Actuaries possess a unique mix of mathematical, analytical, communication and management skills, and use these to inform important high-level strategic decisions and to impact legislation, businesses and people’s lives. We also have the potential to create social impact, and if we wish to do so, we must put the end users – or ‘customers’ – of our work at the centre of what we do. The financial sustainability of businesses and products is important, and actuaries are well trained in this regard, but helping to develop well-crafted and material risk management solutions for individuals is our raison d’être. Indeed, the two goals complement each other, and designing customer-centric solutions is good for business.
Starting with an intimate understanding of customers’ needs and risks often leads to bettersolutions than starting with modelling work, which often involves little contact with, nor firsthand experience of, the people whose lives we hope to improve. Understanding customers is a critical step that actuaries should actively engage with, rather than delegating it to market research and other non-actuarial teams – not only because it can be incorporated into the actuarial control cycle, but also because it can help us to evolve our advice and solutions. Human-centred design (HCD) techniques are an effective way to achieve this.
What is HCD?
HCD is a creative problem-solving approach that is built on empathy. It helps designers to be client-centric in addressing the needs of those who are experiencing the problem, and involves creating, failing fast and learning quickly. The design thinking process typically includes three phases:
- Inspiration involves learning about the problem, which motivates the search for solutions. Henry Ford famously said: “If I’d asked my customers what they wanted, they’d have said ‘a faster horse’”. Customers may not always know what their unmet needs are, but immersing ourselves into their environment and observing their behaviour gives us information.
- Ideation is about synthesising these lessons, and developing and testing ideas. This may involve sketching and designing through journey mapping or storyboards.
- Implementation is learning by creating and prototyping. Embracing failure through re-iterations of proposed solutions is a key part of the HCD philosophy. These re-iterations allow designers to gain feedback and incorporate changes early on, before rolling the solution out and investing in costly full-scale implementation.
HCD is not dissimilar from the actuarial control cycle (or from other industry processes, such as the Deming Cycle and the Lean Start-up Approach), except that HCD focuses on people. It is a cycle of cultivating deep empathy with the people you are designing or redesigning with and for; generating ideas; building prototypes; sharing lessons; improving the offering; and eventually launching an innovative new solution. HCD has been deployed in a wide range of contexts and settings, famously being used by Steve Jobs when developing Apple products.
Olivier Delarue, senior adviser at the UN High Commission for Refugees, said of HCD: “It is about [the end-users] and for [the end-users]. The closer the end-users’ needs are analysed and answered, the more successful the adoption or purchase of a solution. You iterate until you get it right from a customer perspective. This the power of HCD.”
We present three cases in which actuaries used HCD, demonstrating its value in facilitating the design of innovative and creative solutions.
Case 1: Sparking innovation through Impact Hack using HCD techniques
With the goal of internally crowdsourcing innovative and technological solutions to critical challenges experienced by low-income customers, the MicroInsurance Centre at Milliman ([email protected]) organised a hackathon, the Microinsurance Impact Hack, in 2020. It involved more than 70 Milliman employees: a diverse mix of actuaries, technologists, designers, marketing personnel and office administrators. Participants were based in nine countries and worked in teams to design solutions for pre-identified ‘challenges’, ranging from re-imagining claims and improving health outcomes, to nudging low-income customers to save. Putting humans at the centre of the problem in pursuit of an aggregable solution also avoids group think.
The challenges were framed as ‘How might we…?’ statements, setting the designers up to create innovative solutions with a focus on creating positive financial and social impact. Participants were encouraged to use HCD techniques in their ideation, including defining a persona (a representation of the end-user), finding analogous inspirations (inspiration in different contexts), doing Crazy 8s (sketching eight quick ideas in eight minutes) and dot voting. At the end, multiple ideas were seed-funded, and these teams were given the opportunity to turn their ideas into real products.
Case 2: Supporting public health in Ghana
In 2017, the International Labour Organization’s (ILO) Impact Insurance Facility, with support from the French Development Agency, embarked upon a two-year partnership with the Ghana’s National Health Insurance Authority (NHIA), having earlier identified and proposed three ambitious initiatives to improve the country’s provision of public healthcare:
-Digitalise the membership renewal process
-Enable citizens to renew their membership on their mobile phone
-Verify identities at the healthcare providers.
While this was not a typical actuarial assignment, two IFoA Fellows (Lisa Morgan, technical specialist at the ILO, and Shilpi Nanda, the dedicated ILO Impact Insurance Fellow seconded to the NHIA) were involved and worked closely with the relevant NHIA teams. To find a workable solution, HCD was used – namely a ‘design sprint’ process. This is a step-by-step model that guides teams through a shortened creative design process over three to five days.
The sprint became the basis of a more extensive design process, in which prototypes were tested with additional users and their feedback was incorporated through several rounds of refinements. NHIA believes that, had it used the traditional brainstorming and piloting process, it would have identified such refinements much later, at which point implementing them would have been more costly.
After rigorous iterations of designing and piloting, Ghana’s vice president Dr Mahamudu Bawumia launched the solution in December 2018. By the end of April 2019, 1.44m mobile renewals had taken place, with an average of around 90,000 each week. The NHIA went on to win an award from Ghanaian policy think tank IMANI recognising it as Ghana’s Most Innovative Public Sector Institution, as well as two prestigious awards at the Africa Public Sector Conference in 2019. Furthermore, Dr Bawumia commended the NHIA for enhancing social auditing and accountability through its use of digital technology, saying it was “a phenomenal innovation, increasing access to healthcare by those who need the services most”.
Case 3: Using gamification to educate customers in Africa about insurance
From talking to customers, Kenya-based firm AB Consultants found that insurance uptake was low due to poor understanding of how insurance works, low trust levels and cultural barriers. Together with actuary Barbara Chesire-Chabbaga, the firm applied HCD techniques to tackle the narrative that ‘insurance is sold, not bought’ by designing an insurance education tool called ResilientME!
Designed through collaboration with micro-entrepreneurs, ResilientME! is a fun, cost-effective game that teaches players about financial planning, with a focus on savings, credit and insurance. Developing the game required the design team to step into the shoes of its end customers and empathise with the financial decisions they must make on a limited budget, challenging them to think about how insurance can be made valuable for customers.
The game simulates real-life events that have financial impacts on families, micro-enterprises, smallholder farmers, informal sector workers and other low-income households. Participants are drawn from various businesses, literacy and income levels, with the aim of mirroring real-life scenarios.
Through partnerships with the NGO Hand in Hand Eastern Africa, ResilientME! has been used to successfully train more than 3,000 micro-entrepreneurs, and participants demonstrated a demand for insurance after playing it. Similarly, through a partnership with Syngenta Foundation in Sudan, the game will train an additional 20,000 farmers about the benefits of crop insurance. Simulations such as these help customers to imagine what insurance can do for them – almost like getting to try on a pair of shoes before buying – and gives participants a better understanding of risk mitigation mechanisms.
Key takeaways for actuaries
HCD enriches the actuarial toolkit, enabling customer-centric innovation through an inspiration, ideation and implementation process. From pricing to product testing to monitoring, HCD gives actuaries tools that break down barriers and silos, allowing them to become truly customer-centric. When customers are the centre of attention, insurance can become relevant and easy to use.
Queenie Chow is a senior consultant at the Microinsurance Centre at Milliman in Melbourne
Lisa Morgan is an actuary at the ILO’s Impact Insurance Facility in Geneva
Barbara Chesire-Chabbaga is managing director at AB Consultants Ltd in Nairobi
Resources and references
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