Today's insurance consumers demand competitive pricing and customized products. (Photo: iStock)

It is time for insurers to take personalization seriously.

In every industry, customer experience is becoming highly personalized, and many consumers will not even engage with a brand unless the message and offer is tailored to their needs and situation. 

Insurers seeking to deliver personalized services need to have a better grasp of customers’ behaviors and actions, and use this insight to offer more frequent and higher-value interactions.

Accenture research indicates that 80 percent of insurance customers are looking for personalized offers, competitive pricing and recommendations from their auto, home or life insurance providers, and an additional 77 percent are willing to provide usage and behavior data in exchange for lower premiums, quicker claims settlement or insurance coverage recommendations.

Related: 3 in 10 Americans would likely share tracker data with insurers

Digital and retail giants such as Google and Walmart are already ahead, collecting large quantities of consumer data via smartphones, home hubs, shopping loyalty programs and other sources. By doing so, they have the intelligence to identify where customers are located, how they manage their personal lives and possessions i.e. their home and vehicle, and what life stage they are at. In comparison, less than a quarter (22 percent) of insurers have launched personalized or real-time digital or mobile services to date.

It’s clear that many insurers are failing to capitalize on the opportunity, opening up potential revenue to more forward-thinking competitors and cross-industry players who are delivering levels of personalization that many insurers would struggle to match.  

Adopting a new mentality

Today’s insurers are hindered by the fact that the industry has traditionally maintained a low frequency of interactions with customers. Product-oriented cultures, reliance on independent distribution partners, complex organizational structures and outdated technologies also provide challenges.

Insurers that strive to provide a superior customer experience must migrate from a transactional mentality to a relationship mentality. They need to think beyond insurance related products and services, and the limited range of insurance process-related customer interactions like bills, payments, renewals and claims. Instead, they should look at the bigger issues, such as helping customers live the sort of lifestyles they want, prevent losses, or to take the necessary steps to improve their financial well-being. By doing so, they will change customer perception and drive growth in new product and service categories.

Capitalizing on customer personalization

To take advantage of the opportunities that greater personalization enables, insurers need to start by formulating and implementing an actionable customer strategy. Advanced analytics capabilities will enable insurers to create precise and actionable customer microsegments and propensity models based on demographics, life stage, needs and behavior. From this, insurers can identify segment-specific opportunities to personalize offers, messaging, pricing and recommendations to individual customers across physical locations, web, mobile, and call center channels. Insurers will need to ensure that their marketing processes, tools, organizations, and agency relationships can cost effectively scale up to enable greater content and message variations necessary to deliver more personalized, omni-channel experiences.

Insurers can also benefit from developing a test-and-learn capability that can operate at speed. Once success is achieved on a small scale, they will need a customer-centric operating model to rapidly integrate the learnings across channels and lines of business, where appropriate.  

Leading insurers are starting to take this approach to deliver increased levels of personalization. One major insurance provider, for example, is working to combine profiles of customers’ past and current transactions, and content from social channels, to create a personalized experience on its mobile app. Another insurer is developing customer microsegments to help improve the returns on customer retention and cross-sell campaigns and offers.

See also:

Big data a big deal? For many U.S. life, P&C insurers, not yet

How big data helps the insurance industry

The power of leveraging larger quantities of data

As the number of Internet of Things (IoT)-enabled sensors and devices explodes, insurers will have the opportunity to leverage even more data on a much bigger scale from these devices to better meet customer needs, in particular, around loss prevention and protection, pricing and coverage optimization, and value-added services. For example, by monitoring for water leakage, insurers can alert customers to a problem and enable them to act more promptly to prevent or at least minimize damages in a home or business. As a value-added service, the insurer could even call a plumber on the customer’s behalf to get quotes. Customers who opt into this service could receive a discount on their homeowner insurance.

Some leading insurers are already moving in this direction now. Research suggests that 16 percent are already working with startups and external partners to drive digital innovation, while another 17 percent are partnering with non-insurance companies to offer customers a broader range of relevant products and services.

For instance, Direct Assurance has begun offering You Drive, which collects information from subscribers’ automobiles and provides them with personalized daily driving advice via social media, as well as monthly scores that impact the cost of individual premiums. And Vitality, a global wellness company and loyalty-based program, is working with a number of insurers including John Hancock, Generali and Ping An, to provide proactive fitness and well-being coaching, and to reward policyholders with insurance discounts for healthy lifestyles based on data collected from wearables and other technology.

Delivering on customer needs

Insurers that truly know their customers, maintain a continuous level of interaction and build customer trust will be better placed to capitalize on the opportunities of delivering higher levels of customer personalization. They will also provide a stronger value proposition to their customers — one that includes not just indemnification, but constant protection. Doing so will help insurers maintain a competitive edge in fierce, growing and diverse market.

See also:

4 reasons why insurers must adapt to the omnichannel world

21 emerging risks for the insurance industry and global economy

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