The following article is provided by Jonathan Tanner, senior director, industry principal financial services & insurance APAC at Pegasystems.
Personalisation has always been an important concept for organisations to implement into their business, including insurance providers. As humans, we want to be treated as the individuals we are, and not the “next customer”.
While what personalisation looks like today is vastly different from what it looked like years ago, its importance continues to rise. Previously, personalisation was dependent on an insurance agent where they would know and develop relationships with customers over time. But as digital experiences have taken over, what it means to “personalise” is a very different proposition today. In 2022, personalisation will continue dominate, so insurers must innovate in order to retain existing customers and acquire new ones.
As I just mentioned, personalisation has completely transformed over the years - from insurance agent relationships, to adding names to emails, to where we are now with proactive and situational service. The next step for insurers is to innovate in the way they support and get a better understanding of the customer.
For example, IoT devices and wearables are a big part of everyday life for most people, and they can have a profound impact on how we live and/or make healthy lifestyle choices. This can be seen through smartphone apps helping us count calories and stick to diets, or smartwatches encouraging us to exercise each day. By utilising these types of non-traditional data sources, insurers can gain a more accurate picture of their customers and move toward dynamically adjusting underwriting based on ongoing data.
In short, with a reduced mortality risk, many insurers are facing challenges in acquiring new customers. And while there has been an uptick as a result of COVID-19, the long-term expectation is that we will continue to see a decline in traditional policies. This trend is being exacerbated by the lack of innovation in the industry, particularly with how insurers price their policies, which has mostly remained unchanged for decades.
There needs to be a shift in the traditional approach insurers take when developing a policy; the typical approach sees an individual assessed, then a policy priced accordingly. In the future, the expectation is a more sophisticated, personalised approach leveraging data from things like wearables and other non-traditional sources. This will allow for a more dynamic and personalised offering to customers that will also act as an incentive to live a healthy lifestyle, where in return they earn a more affordable policy.
Personalisation should be implemented and used to benefit the customer, and not as a way for the brand to push more products in order to increase the bottom line. By better understanding the customer (through various data sources) and working towards their needs and situation, both parties will be the beneficiary of a long-term relationship that will ultimately have a greater impact on the bottom line, as well as a more satisfied customer.
For more information on how your insurance organisation can improve its personalisation and build stronger and ever-lasting relationships with customers, reach out to me on LinkedIn.
