In May we did a webinar with our friends at POST called ‘Building brand loyalty in a digital age’. Reevoo founder Richard Anson sat on the panel with Jonathan Swift, (director of content, Insurance Division, Incisive Media); Lorraine Donington (head of digital user experience and content, TSB); Phoebe Hugh (co-founder & CEO, Brolly); and Darrell Sansom (managing director, AXA Business Insurance).
Nobody’s got an hour to spare, so check out our pick of the best bits. However, here’s a more in-depth look at one of the points we found interesting – the importance of big data in insurance.
Tight profit margins, closely examined risks, and highly specific coverages are exactly the type of concerns that data would help with. - Highlight to share -
Big data – and more importantly, the analysis and understanding of it – is revolutionising nearly every industry under the sun. From healthcare to home improvement, automotive to accounting, data is helping people work smarter, better and faster. But what about insurance?
Sure, automotive insurers have made some steps in the industry with their in-car dongles, but the underwriting of property and casualty insurance policies has kept a curious holdout. Surprising given the precise and exacting nature of their work.
Tight profit margins, closely examined risks, and highly specific coverages are exactly the type of concerns that data would help with.
This is poised to change, though.
— Electropage (@ElectropageIt) June 29, 2015
Some leading insurance companies are beginning to embrace data to demystify their decisions and shed light on who their customers really are.
Liberty Mutual Insurance, for example, has partnered with smart-home technology company Nest to provide its smoke and carbon monoxide monitor to customers free of charge.
The monitors collect select data about the insured property and send it to Liberty Mutual, including the battery life of the monitors, the location of the home, the placement of the monitors and whatever else might be interesting.
Customers, in return, receive a discount on their insurance premiums for their cooperation. They also stand to save even more, depending on the risk habits revealed by the data. Similar to those in-car dongles, customers are incentivised to participate by the chance to save money.
Similarly, last year insurance company John Hancock became the first to offer ratepayers a discount when they use Fitbit wristbands that enable exercise tracking. Offering people discounts to give their data is a good start – but if it’s the only motivation, you risk affecting the integrity of the data.
Customers will generally volunteer personal information under two circumstances: if they get something in return, and if it’s easy. Smart technologies like Nest are making the latter a reality. But, as we mentioned in our webinar in May, the former is enormously important. Brands must use data in a way that adds value to the customer. We think this goes beyond just a few pounds off the bill.
Brands should be using data to better understand their customers.
The technology exists to make this a reality. Data can reveal meaningful, valuable insight about customer habits that not only would have gone unnoticed, but may have gone unappreciated for the impact it has on their buying choices.
Unfortunately, for most insurers, it’s not as easy as throwing a FitBit on a customer’s wrist. Recognising what you’re looking for – and where you’ll find it – is a huge challenge. But we’re living in an age of customer feedback. People are more than happy to share their feelings about a product or service. In fact, they expect to.
Brands must use data in a way that adds value to the customer. - Highlight to share -
It’s a simple fact: companies that truly understand their customers do better than those who don’t. Traditionally, those companies who are in tune with the needs and wants of their customers tend to perform better in market downturns, stay ahead of market trends, and generally outperform those with a lack of customer understanding.
As more companies embrace the greater understanding about their customers – and the ability to add value to those customers – that data gives them, you can expect to see it become more prevalent over time. Soon, insurance companies will be wondering how they ever got by without it.