The THiNK Blog

grab a coffee and give yourself the freedom to read



coffee-cup-zoomed-in-hero

Key Takeaways from ELHUA: Behaviour Economics, Niche Health & Innovation

Mon, 24 Oct 2016 18:19:20 +0000 / by Carmela Tedesco

ct-image-key-ta_17431296_5b73c8697d73b8af8af41cf94bd03e3bd7f30d83

Have you heard of behaviour economics? It has to do with studying the effects of psychological, social, cognitive and emotional factors on the economic decisions of individuals. It was also one of the topics discussed at the ELHUA conference recently held in Madrid. So why was this a topic of discussion at a European underwriting conference? Find out below where I breakdown insights from this topic and other highlights from the conference.

Behaviour Economics: the difference between System 1 & System 2 Thinking

 As I mentioned, Behaviour Economics was one of the topics discussed at ELHUA. The conversation was led by Claire Nolan of Swiss Re who has a whole team dedicated to this. The major takeaway during her presentation was the difference between System 1 and System 2 Thinking, as it relates to buying insurance.

System 1 Thinking: automatic, fast and non-conscious thinking (Nolan noted that when people apply this kind of thinking, they look for the easy way such as shortcuts, cheat sheets or for others to make the decision for them).

 System 2 Thinking: controlled, slow and conscious thinking (more complex thinking is involved here) 

How does Behaviour Economics apply to the insurance industry?

During any activity that involves thinking, people apply either System 1 or System 2. However, most people prefer System 1 Thinking. Which could suggest why consumers find buying insurance online difficult because it’s too complex and requires System 2 Thinking. i.e. How much insurance do I need?  What term?  Benefits? Riders? Etc. As a result, people don’t proceed with the sale because it’s not simple.  People like Simple!

So how can the insurance market try to ‘facilitate’ System 2 Thinking to improve the experience of buying insurance online? By considering something called the MINDSPACE Framework, also discussed by Nolan which ‘nudges’ people along the buyer’s path: 

The MINDSPACE Checklist

This checklist helps us understand what influences consumers’ behaviour and how we can influence behaviour and nudge consumers’ down a buying path.

[M]essenger Source of information is important and has to be trusted i.e. friend vs stranger
[I]ncentives Use Tools such as incentives to get people to buy
[N]orms We do what others around us do i.e. follow the crowd
[D]efaults We ‘go with the flow’ such as pre-set options. An example of this is with organ donation. In some countries driver’s licenses are automatically an ‘opt in’ rather than having to check ‘opt in’
[S]alience We respond to things that are important and relevant to us
[P]riming We are set up for ‘biases’ or ‘sub-conscious’ cues
[A]ffect We act based on emotional association.  Charities use this in their marketing
[C]ommitment We want to be consistent with our public promises and reciprocate
[E]go Our actions are influenced by what makes us feel good


Great discussion overall and an interesting way to address pain points for consumers buying insurance online.  I also agree with Nolan when she addressed some of the pain points in Life & Health underwriting such as accurate disclosure to health questions and the speed of doctor’s reports.  She discussed ways to tackle these pain points and I will share my thoughts with you on this topic in my next blog, stay tuned.

Niche Health: Addressing underwriting pain points

 Speaking of addressing pain points, one of the benefits of attending a conference is having the chance to discuss industry challenges among professionals who can relate. When it comes to underwriting – Attending Physician Statements (APS or APR) are definitely a common pain point. (In fact, we wrote a series on the challenges of APS for an underwriter!).  So another highlight of the conference for me was learning about Niche Health –  a UK company that has software for doctors to send medical reports (APRs and APSs) electronically.  It cuts down the APS lifecycle from 4 weeks down to 3 days!  Since it is an software provider and not an insurer, doctors respond much faster.  

Last but not least… Innovation

 One thing I enjoy about attending a conference in a region outside of my own is being able to learn first-hand the differences in markets.

 PRO TIP: It’s always helpful to do some research beforehand so that you have familiarity with the market and can ask the right questions when networking. Before heading to ELHUA, we conducted research on the European region to see how we could apply our knowledge and experience from the North American underwriting market.

While there are definitely differences between the underwriting market in Europe and North America, there are also similarities. One in particular being innovation in the industry – which, not surprisingly, was a popular discussion at ELHUA. In fact, innovation has been a common theme at many insurance conferences in 2016 and will no doubt continue to be. While the conversation is ongoing, I always find it interesting to hear the current buzz. At ELHUA, there was lots of talk around Lemonade and Trov.  


You might also like: 3 Things The Insurance Industry Can Learn from Silicon Valley Insurance Accelerator


Suffice to say there were lots of great insights to take in at ELHUA and I hope you were able to gain some too from this recap. Whether you’re a first time conference attendee or a consistent attendee, there are always new trends to learn, connections to make and insights to bring back to your everyday role. Which are similar benefits to joining an industry association or committee.

If this is something you are considering, you may want to read this article: How Joining an Industry Committee Can Benefit Your Career

Topics: Underwriting, Innovation

Carmela Tedesco

Written by Carmela Tedesco

Become an industry thought leader. Don’t forget to share.