A Fair BuyTwo players are negotiating over how a pot of money can be shared. There are two options. Player A can either accept any offer made by Player B or reject any offer made by Player B. In the former option, the money would be split accordingly and both players part ways harmoniously. The latter option entails the end of the game and no one gets anything.

If you are Player A, which option would you pick?

Known as the Ultimatum Game, the simulation has been used in Harvard’s Program for Evolutionary Dynamics to model fairness. Researchers find that half the time, Player A would choose to reject if offered 30% or less. People have a preference for fairness and are willing to pay a price for it. The more uncertain the situation, the stronger the preference.

In a consumer journey, this willingness to pay can be in the form of service fees for professional and unbiased advice or investment in time and effort to ensure fairness in sales and service is provided. In the extreme case, the consumer chooses to disengage totally even if it is costly or risky to do so.

Where there is a platform which provides the means to administer fairness, consumers would gravitate towards it. To illustrate such a platform, Synpulse meets up with Go Bear, a metasearch engine in Asia for financial products.

Fairness Component #1: How do you help me cope with uncertainty? The start of an insurance purchase journey is typically marked by an influx of complex information, creating uncertainty for the consumers. Line by line coverage comparison is complicated by differentiation efforts, making it difficult for consumers to compare.

In response to the uncertainty, Go Bear starts from the perspective of the customer by understanding what people truly find important in insurance. Other than conducting interviews, Go Bear looks at what people search for on the internet, for example travel insurance and camera protection. This yields a unique list of top five ranked features and benefits for each insurance product, contributing to Go Bear’s coverage score – a mathematically derived score to facilitate coverage comparison. Every product is further drilled down as Go Bear analyzes the next ten product features and benefits that people care about. By clicking on the coverage score, the customer can easily see how the score is built up over different benefit categories.

The coverage score serves to provide the customer guidance but is not the key determinant. A low score is not necessarily a bad result. Neither can a high score be automatically assumed to be the best for everyone. Backpackers traveling to Thailand may be fine with a low coverage while aspiring photographers traveling to Bhutan would prefer a more extensive coverage.

Go Bear does not believe one always has to marry coverage score with price. Rather, both elements are displayed separately, side by side. The third element is customer service which is reflected in customer reviews to help customers understand how the experience of their peers has been with the insurers.

Fairness Component #2: Is your gain at my expense? Player A in the Ultimatum Game would rather forfeit any share than to be taken advantage of. It is important to emphasize that the latter does not imply a wholesale resistance against someone else to make a gain. The market clearly does not solely run on free services. However in a fair environment, a seller’s gains should not make the buyer worse off.

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Source: Go Bear

Go Bear maintains fairness by maintaining a cost-per-click revenue model, independent of the sale conversion success. Commission- based, kick-back or revenue sharing model is avoided. By relying on a small fee charged to the insurer for every click on its product (and user thereafter sent to the insurer’s website), Go Bear ensures that its revenue is not influenced by the selection choice of the Go Bear user and thus maintains itself as a truly unbiased platform. A win-win situation is created through this model. The insurer “owns” the customer relationship and if managed well the value of the customer can be much higher than a one-time product purchase. Furthermore, Go Bear’s users, having been guided by the coverage score and had their product uncertainties reduced, tend to click on insurers with the intention to buy. This results in the best conversion rate in the industry and for insurers the lowest acquisition cost for new customers. It also avoids channel conflict since users decide whether to buy from an insurer direct, a broker or agent although the option to transact online is provided.

Fairness Component #3: Is reputation at stake? Imagine that the Ultimatum Game is reiterated multiple times in a closed environment. Different players face off each other per session and have visibility of each other’s past offers and choices. Player A would not want to be known as someone willing to take low offers and risk future lower offers.

Flipping the situation, sellers can be Player A and want to be treated fairly too. The Go Bear platform would not be sustainable if insurers put up a blockade. Go Bear believes that offering its users ease of use and unbiased transparency across price, product features & benefits and customer reviews, ultimately leads to more satisfied customers for insurers. The Go Bear process supports users in making well-informed decisions which are far from being unidimensional. By sharing its analytics with partners, Go Bear also supports insurers to better tailor their products to meet customers’ needs in different segments of the market. The Go Bear model is oriented for customer’s best interests by working in cooperation with insurers, brokers and agents.

In All FairnessFairness is neither an exclusive nor predisposed characteristic of any distribution channel. The advisor channel can be equipped to serve customers’ best interests. In the next article, we elaborate on ideas to transform the advisory process.

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About the Authors

Contact usSynpulse is happy to discuss further about digital distribution for the insurance industry with you.Please contact our topic expert Clarie Kwa clarie.kwa@synpulse.com.

Clarie KwaSynpulse Singapore Head of Insurance

Clarie actively connects industry & project experience in Asia across the insurance value chain and online retail market to offer rejuvenating and pragmatic views of how distribution can evolve.

Synpulse is an established, globally active management consulting company and a valued partner to renowned international financial services companies.

Andre HesselinkGo Bear CEO

Andre’s background is in the online industry. After setting up several internet companies in Europe and Sillicon Valley he moved to Singapore a few years ago to start the meta search engine Go Bear, with only one thing in mind: To help users across Asia in an Unbiased, Simple and Easy way in search for the right insurance/ financial product.