While many customers appreciate the value of insurance, many are also finding it difficult to understand its intricacies, according to Tower CEO Blair Turnbull (pictured above).
Turnbull, who featured on IBTV, said that Tower’s research into its customers experiences has found that many customers do not grasp how insurance works and why they pay the premiums they do, despite recognizing its importance.
“What we saw in that research with our customers and our communities is two things became very clear to us,” Turnbull said. “Customers often struggle with insurance. They appreciate, they want it and need it to look after their beautiful homes and car and pets and so on. But they have struggled to truly understand insurance and also link that back to the premium. Why do I pay this much for my home versus the person next door? Why is it different?”
According to Turnbull, Tower sought to change that by improving its customer experience by making it simpler, fairer, and more transparent.
“Last year, we introduced what we call risk-based pricing for flood, in addition to earthquakes,” Turnbull said. “What we've done is use the technology side – digital and our data to capture 50 years of a large event experience and lots of data around floods and earthquakes and so on.”
To do this, Tower partnered with leading international firms such as RMS, analysed the data and presented it back to the customers.
“What we can do now is show to every single customer and person in New Zealand the risk profile of their home, whether that's low, medium, high or very high for flood and also for earthquake,” Turnbull said. “Furthermore, we've translated that into the premium so that people understand what portion of their premium goes to paying for flood or for earthquake.”
According to Turnbull, risk-based pricing helps people better understand the risks faced by their home and also helps them see how these risks affect the amount of premium they pay to keep their homes insured.
