Posted April 12, 2018 by Ian Betley
The following originally appeared on The Actuary, "Insurtech: A Data-Enriched Journey," published March 8, 2018. Used with permission.
Insurtech is revolutionising the way people have access to insurance. But how can it generate more sales, increase rates of retention by delivering more personalised products and improve customer experience?
Technology that embraces data is the linchpin for firms that want to increase market share. Consumers also demand information relevant to their specific preferences when they need it and via the channel that suits them. Established insurance firms’ legacy systems are typically less agile and unable to respond to market demand appropriately, creating opportunity for nimble challenger brands with a data-and-technology-first philosophy to generate bespoke solutions and niche products.
Imagine booking a family skiing holiday online, a single decision that invokes a number of potential insurance implications. First, it makes sense to take out family travel insurance. You may also consider some specific income protection or accident cover just in case you suffer an injury. Similarly, you may want to ensure you have sufficient cover on your home insurance policy given that your property will be vacant while you are away, and you might legitimately expect a decrease in your car insurance premium as you won’t be driving it. These are incremental insurances designed to provide specific (albeit temporary) cover against potential events and would clearly attract additional premiums.
Complex it may be, but imagine if a brand you trust provided you with the ability to adapt your insurance around your immediate lifestyle needs; by delivering tangible value and a compelling reason to use and be loyal to a single provider?
Similar principles can be applied when you consider other family events (birth of a child, house move, car purchase) and combining the financial liabilities these may generate with the need to protect your family’s future financial security. Challenger brands could offer this personalised service via the internet of things and, in doing so, steal a march on more established and less agile players. To attract and retain customers it is essential to apply a customer-centric ideology; traditional insurers need to reassess their attitude towards data-driven, digital technologies and modernise their processes and the relevance of their offer to customers. In fact, it is conceivable that the leading data-driven ‘lifestyle’ insurance firm of the next generation does not yet exist; smartphone or network providers, such as Amazon and Google, must all be in a prime position.
So what are the steps to protecting against this, or taking advantage of the opportunity?
Step 1 Create the vision you want to achieve by using data: enhancing customer loyalty to deliver greater customer value, lower aggregated costs and enhanced profitability.
Step 2 Create a ‘customer first’ approach: how you design your business, how you target your markets and how you engage with customers. ‘Digital by design’ should be the core principle in the business DNA to deliver a complete omni-channel environment, uniting sales, risk management and administration.
Step 3 Create a fresh perspective on the traditional view of insurance: hire talent from outside the insurance industry to bring in new ideas, ensure the right people lead the transformation, giving them the freedom to execute technologically and data-driven plans aimed at the consumer.
Small changes will not guarantee success; what is needed is a vision to transform the current operating model. Businesses should focus on developing technology and customer engagement strategies that embrace the effective use of both internal and external data. The General Data Protection Regulation (GDPR) may well be a catalyst for bringing together a more cohesive data strategy, where the compulsion of regulation adherence creates a real opportunity for better data utilisation. Building the right data enrichment strategy now will position the business to thrive in the post-GDPR world where customers will expect to see a ‘value exchange’ for providing permission to use their data.
Ultimately, customer service is a given, customer experience is the differentiation. An improved experience is not just about timeliness, it’s about ease, trust, relevance, accessibility and perceived value across all channels – it’s about me; the customer. Only then will you achieve loyalty.
The views expressed in this publication are solely those of the author and do not necessarily reflect the position or policy of DST Systems, Inc. or its affiliates, subsidiaries, joint ventures, officers, directors, or management.