The Impact of the Data Revolution on Customer Insight in the Insurance Industry
Many in the insurance sector don’t need reminding that we are in the midst of a data revolution. Telematics, the connected home and wearables are just some of the developments that are having an influence or are poised to do so in the future.
Alongside more traditional data, these new and accelerating developments present a huge opportunity for brokers; and not just insurers. As major distributors and trusted advisors, brokers must ensure they recognise this rapidly changing environment and seek to add value to remain relevant.
Understanding market developments is crucial, and this also means keeping a close eye on what your rivals are doing with data to enrich their business and customer offering. Are they investing in technology, leveraging social media or taking a more sophisticated approach to data mining?
Competition from existing players in the market is already strong, and increasing apace. In addition, there has been talk of ‘disruptors’, such as Google or Amazon, entering the insurance market armed with strong brands and even deeper data. The market is challenging and there is no sign of this abating.
Security is Critical
One fact remains – for those already in the market, securely holding the right data and using it wisely is becoming increasingly critical. Some 20 years ago, supermarket Tesco introduced its club card scheme – the data it holds on its customers proved valuable in many ways, not least in maximising their targeted promotion and sales of financial services such as motor, home and pet insurance.
Data has formed the basis for underwriting for centuries and it continues to evolve. Armed with a more granular picture of consumers, businesses can better inform their acquisition and retention strategies, as well as improve contact with customers and beefing up counter fraud strategies, for example the DVLA’s MyLicence and the Insurance Fraud Register.
The way brokers are embracing and mastering data varies. Some are more progressive and savvy than others. Schemes specialists and those who are big players on aggregators may have more insight than some others who still rely on local presence to bring in customers. But, this doesn’t have to be a zero sum game.
Notably, some mid-market commercial brokers are waking up to the fact that larger risks can increasingly be written online if strong data is held. Working with their software houses, technologically enabled insurers and partners allow brokers to provide more tailored and appropriate solution for clients.
Brokers need to ensure they have the right solutions at their fingertips to capture data, whether it is via their websites, social media, transactions or survey feedback. Brokers who are serious about making more effective use of data and upping their game by looking carefully at their partnerships, and how these can further enrich their information.
Lots has been written about the need for marketers to be both artist and scientist. The challenge is for us to become diplomat and politician too, as we look to work with organisations who don’t have the resources to invest heavily in new business models that focus on the customer and rely on data.
We have to collaborate with partners; whether they are marketers or not, to drive the commercial performance of our respective businesses. Investing time in understanding your partners’ business is always well spent, and will pay dividends for the end customer, your partner and your business.