Here's what insurers need to know about the data revolution
As consumers grow more comfortable sharing their data, insurers have the chance to harness it to better serve insureds.
Insurers are entering a future in which customers are more comfortable than ever sharing personal information. Their success hinges on being prepared.
Nearly six in ten consumers say they’re open to sharing location data and lifestyle information if it leads to decreased prices for financial products and services, according to Accenture. A separate study by ALC finds that nearly seven in 10 consumers are willing to give up data in exchange for special offers or discounts — with the caveat that the data remains secure.
As consumers become more comfortable sharing their data, insurers have the opportunity to harness that information and develop creative new ways to serve customers. But they are also entering an era in which all eyes are on data privacy; mishandling data can lead to a bruised brand and diminished customer trust.
As careful as insurers should be in making sure their data remains protected, there also should be mechanisms for consumer data to be shared securely across an organization, to ensure every bit of value is being passed back to the customer.
Data and tomorrow’s insurance customer
A customer base willing to share certain data is one half of the equation for insurers. The other half requires them to turn that data into something valuable for customers. A trove of raw data means nothing if an insurer can’t organize it, identify trends and create meaningful new services and offerings to their customers.
What might these advances and enhancements to service look like?
- A customer that feels cared for: There are a multitude of customer personas across the insurance sector. Each has individual needs, abilities and attributes, all of which could benefit from a more personal policy. As location data becomes more pervasive and widely shared, particularly “hyper-location” data that offers a very accurate approximation of where the customer is, it can help paint a much clearer picture of the customer. This can allow for more personalized offers, discounts based on certain behavior, and savings determined by where the customer lives and works. A driver who spends most of her commute within an area with very low reported traffic accidents, for example, could see rates reduced over time for that reason. Similarly, a patient with Diabetes could earn rewards from their health insurer by making purchases at healthy restaurants or grocers. When insurers can adapt their products and offers to the lifestyles of customers, the customer in turn feels like the company is truly looking out for them.
- More flexible offerings: More data also means insurers can segment customers much more accurately and dynamically. Running queries and performing market research can be done faster, and ultimately, the more data is known about the customer, the more product offerings can be effectively tweaked and changed.
Car insurers offer one interesting use case in this scenario. Insurers could begin to examine why a very specific geographic area seems to be the location of fender benders. It could then offer those customers an incentive to re-route their commute, or could use that information to create marketing content that identifies unsafe roadways or intersections.
Smart data handling
With more data comes more responsibility for insurers. Customers won’t remain comfortable for long if their insurer falls victim to a data breach, or uses the information in an unethical way. Insurers must be careful and purposeful in how they use customer data, and keep the following principles in mind:
- Security is paramount: As data piles up, so does the infrastructure to store and maintain it. Insurers need to be absolutely confident in their data security practices, conducting regular audits and always keeping on top of industry best practices. Especially as incorporating sensitive data like customer’s location or health information becomes more common, insurers need to make every effort to prevent against leaks.
- Don’t overlook transparency: Just because consumers are willing to share more data doesn’t mean they are completely comfortable doing so. Insurers across industries should be transparent with their customers, proactively and clearly communicating what data is being collected, how it is used and who it might be shared with for any reason. Additionally, insurers should make it easy to opt out of any feature that a customer is not comfortable with.
- Teams must collaborate: If new data is useful to one business unit, it’s also very likely it will benefit another. However, it is more often the case that data remains in the domain of one department and is not shared. Significant opportunities to do things like empower acquisition, cross-sell, upsell marketing efforts and enable agents to better understand their clients are missed when data isn’t made available to everyone that could use it.
A true inflection point has arrived for insurers, where customers are finally feeling comfortable with sharing some of their most personal data. If insurers make sure to treat this opportunity with care — by keeping data protected and using it to create a better customer experience — they will realize valuable new ways of doing business.
Martin Kurpiel (martin.kurpiel@valid.com) is senior vice president of Technology Services at Valid, an international data solutions company. These opinions are his own.
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