For quite some time now, it has become the norm to provide personal data to access services, products, and other digital solutions on the internet. However, the leniency of the population did get tested a few times over the course of several years (Ashley Madison comes to mind), and in the process, more and more people began to see data privacy and security as something that should not be taken lightly, especially as we step into a more digitalized world.
Despite these events, there is a lot to gain for the insurance industry from more trusting customers, Capco APAC insurance partner Darren Pigg (pictured above) said. Personal data comes part and parcel with insurance, and customers from the Hong Kong and Greater Bay Area are prepared to place their trust with firms who can give them better, more bespoke solutions.
“Most insurers have been adopting more customer-centric strategies and approaches over the last few years and trying to better understand their customers,” Pigg said in conversation with Insurance Business Asia. “However, pursuing this in a significant way can involve a significant shift in business model and associated architectures. For example, in Asia, life insurance has been predominantly sold by intermediaries and therefore it is those intermediaries that have previously held the relationship with the end customer.”
This higher level of trust was at the centre of Capco’s latest findings, which revealed a customer base that would like to share more personal data in exchange for securing more personalized services. Pigg said that insurers across the region can easily capitalize on this important trend, and it all comes down to doubling down on the customer experience factor.
“For an insurer to get closer to the end customer, they need to build experiences and propositions that meet the needs of their target customer segments, and then personalize their offerings more precisely within those segments,” he said. “They need to be able to offer the right omnichannel experiences and equip their advisors with the right tools and propositions to maximize their productivity. To do that, they need to understand a lot more about those customers.”
Succeeding in this challenge comes down to several factors, Pigg said, and all these factors have to do with what insurers do with the data that they collect. Managing the data, enhancing the data – it all should come to bring together a single view of the customer to deliver tailored products and services.
“To do that, they need to understand the data that they currently hold on the customer and assess its accuracy. They then need to identify what additional data elements they need to offer more personalized solutions, and how best to obtain them – for example, through improved engagement strategies and partnerships,” he said.
Choice and modularity also come into play, and Pigg said that the final piece lies in unbundling products so that customers and advisors can fully realize their own solution that is best in line with their needs, budgets, and priorities. However, such a complex system with personalization options would also require a modernization of existing data architectures to better parse through the information that will be collected.
“It is worth pointing out that, compared to other non-APAC markets covered in our survey, insurers in this region – including those in Hong Kong and the wider GBA – have an advantage due to customers’ very positive attitude to data sharing,” he said. “In APAC markets, we do see a somewhat greater willingness to share additional personal data than in the US and Europe, for example. Just as importantly, getting cheaper premiums is not the dominant motivator for sharing that data, as it is in the US and Europe – instead, more personalized services and enhanced insurer processes are the most important considerations.”
While APAC customers are more likely to trust on data sharing and privacy, this rising trend of digital trust extends outside of the region. Pigg said that most policyholders around the world are willing to consider sharing data with insurers in exchange for benefits, be it more personalized services or cheaper premiums.
“For example, 94% of Hong Kong respondents will consider sharing data in exchange for a range of key benefits, compared to 90% in the wider GBA (ex HK) and 81% in the UK (a typical European market in this respect). Perhaps more marked, however, are the different preferences in terms of motivations to share and ways of sharing,” he said.
In Europe, what drives this trust is the motivation for cheaper premiums, with Pigg noting that 42% of respondents selecting this reason on average across different markets in the region. APAC markets like Hong Kong and the wider GBA place a greater emphasis on more personalized solutions and enhanced processes as opposed to cheaper premiums, although it still worked as one of the better customer lures.
“Likewise, sharing social media data tends to be much more acceptable to respondents in surveyed APAC markets than in European markets. For example, to get a more personalized insurance product, 37% of Hong Kong respondents and 40% of respondents in the wider GBA (ex Hong Kong) would consider sharing social media data. In the UK, only 18% of respondents gave the same answer,” he said.
These results point to better opportunities for insurers which offer and greatly prioritize bespoke solutions using customers’ personal data. Pigg said that APAC policyholders, in general, are “more willing to share data, for a wider set of reasons, using a wider set of methods than in many other global insurance markets.”
“However, to take full advantage of this, insurers will need to put in place the right strategies, processes and technologies,” he added.
This opportunity hinges on the fact that insurers can operate daily without any cyber breaches that would result in the leakage of millions of policyholders’ data. Pigg said that the industry already manages these kinds of risk, but that companies should be aware of these threats rising in the future.
“Insurers already handle sensitive customer data, so managing this risk is not new to them,” Pigg said. “That said, the magnitude of the risk is definitely increasing and changing in nature as insurers collect more personal data, from broader partnerships and ecosystems and shift their storage of data to the Cloud. Most insurers are already investing significantly in cyber security, and this has to remain the priority, alongside improved data management and data governance.”
Keeping this trusting trend alive also means taking responsible advantage of the opportunity it presents; for insurers in Asia, this equates to the booming market in Hong Kong and the Greater Bay Area, especially after the lifting of border restrictions earlier this year.
“For many, the pandemic drove home the importance of insurance and, as our survey shows, individuals’ awareness of insurance products has increased. Insurers need to capitalise on this increased interest. They need to help potential customers to really understand their specific needs they will have during their lifetimes, and then articulate clearly how they can help individuals to close the protection and savings gaps,” he said.
“In Hong Kong, the prolonged closure of the border with the Mainland had a big impact on insurers’ books, as Mainland Chinese customers were no longer able to purchase policies. Many believe there is therefore pent-up demand and – now the border is open again – many insurers are revisiting their strategies towards Mainland Chinese customers to try and grow their share of that market.”
This high level of trust not only speaks to digitalized, highly-mobile insurers, but also to legacy-powered ones which still place a greater priority on face-to-face transactions.
“While customers still prefer to interact with agents and advisors when purchasing key policies, this is often now part of an expanded omnichannel sales journey,” Pigg said. “By which I mean that considerably more engagement and nurturing of prospects is happening online, but when it comes to the final purchasing decision customers may ‘switch channels’ and want to speak to someone in person to get advice or iron out uncertainties to ease the purchase, after which they may then be very happy to have their policies serviced via digital channels (or a mix of digital and physical channels). Pure digital sales channels for life insurance remain relatively small in volume and tend to suit the simpler life products.”
In the end, Pigg noted that it will all come down to augmenting advisor-based journeys, as well as equipping both the customers and the advisers with the right tools to meet the customers’ needs.
“It’s absolutely critical that insurers meet this challenge: those who fail to respond, and don’t offer customers the seamless and streamlined experiences that they have come to expect from their interactions with other digital-led organizations, do risk being left behind,” he said.
Like most of everything else in the industry, Pigg expects AI to be a driving force for enhancing the customer journey. However, this will only be true if the technology can offer something to the customers in return – especially when it is their personal data that is on the line.
“Insurers are going to have to work hard to preserve customer trust – it’s a lot easier to preserve trust than to win it back once it is lost,” Pigg said. “The key upcoming challenge for insurers is to make sure that they apply appropriate governance around their AI models and, importantly, the data that these models are trained on. The overriding aim is to ensure the models adhere to the FEAT set of principles (Fairness, Ethics, Accountability and Transparency) that offer guidance on how to apply AI and data analytics in decision making.”
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