By knowing customers as individuals and not just as market segments, insurance companies can offer relevant products at the right time and deliver smooth and engaging experiences. In addition, relying on advanced data analytics enables identification of those who are most at risk of an accident or claim and makes it possible to target communications toward prevention, with a view to progressively reducing costs.
In a data-driven insurance model, insurance companies use the data at
their disposal to develop new solutions, create value-added services for their customers, and produce unique insights through which they can better understand (and allow people to understand) risks. Not only that, data-driven insurance, which has evolved along with the increasing digitization of the customer base, helps give rise to a number of benefits, which benefit policyholders in particular: from the ability to have access to personalized content in upselling and cross-selling, to opportunities for greater listening and engagement, to more attentive and effective customer care.
Data-driven insurance: a definition
The insurance industry has always revolved around data. In the not-so-distant past – we’re talking about the era before the internet – this meant that insurers used historical data paired with inferences about the future to assess risk as accurately as possible and make informed underwriting decisions. For decades, the insurance industry has collected a great deal of data, but it has been rather slow to adopt the new technologies that would have allowed it to exploit the full potential of the accumulated wealth of knowledge.
The context has changed a great deal in recent years, as a result of the spread of digitization and the evolution of data analysis tools. Today, insurance companies have access to much larger volumes of data, which come from an incredibly wider variety of sources.
As more policyholders move online to compare products and prices, to interact seamlessly, and to conclude underwriting or renew a policy, insurers need advanced analytics technologies that enable them to make use of the digital footprints left by customers now more than ever. Today, more real-time data is becoming available, which means that insurance companies can make assumptions about the future not only based on past events but on information that is gathered moment by moment. These new sources of real-time data include, for example, telematic devices that provide detailed data on customers’ driving habits, and they are widely used for usage-based policies.
What is the purpose of data-driven insurance?
Insurance companies, as is now the case in any other industry, have learned to monetize data to gain a competitive advantage over their adversaries. Being able to take advantage of a comprehensive view of the customer through the acquisition of customer-side behavior or preference (CDP) information is not only instrumental in establishing credit profiles but also allows them to develop new solutions, design value-added services for customers, and create useful and meaningful insights. Let’s elaborate.
Developing new solutions
The integration of data management and analysis platforms within the digital application map (CRM, trouble tickets, etc.) makes it possible to implement support tools to perform online a number of actions that were once partially or entirely executable only in person, such as payments, subscriptions, and onboarding actions. In a data-driven insurance model, access to quality information assets is also a prerequisite for further simplification and automation of response processes (as in the case of automatic bill generation or contracts).
Access to an established and continuously updated knowledge base, then, sets the stage for developing relevant and timely communication. To foster customer progression along the customer’s journey and create a series of truly meaningful experiences across all channels, the effectiveness of communication must be maximized at every anticipated touch point in the insurance funnel. Eventual transactions, product offers and business proposals, insights, advice, and recommendations, the insights extracted through data-analysis, allow each piece of content to be tailored to the customer profile, with the ultimate goal of creating engagement and nurturing a trusting relationship over time.
Data-driven insurance makes it possible to implement a business model that is focused on creating innovative solutions that, in order to fulfill their functions, require new channels and, above all, new modes of interaction in turn. In this sense, even in insurance, Customer Communication Management is the most comprehensive tool for meeting the communication needs of a constantly evolving demand. Indeed, a platform for CCM makes it possible to manage communication processes through all possible channels, traditional and even more so, digital.
Designing value-added services for customers
The increasing availability of real-time data is contributing to a fundamental shift in the services that insurance companies can offer customers. Insurance companies accept risk as an inevitability and offer coverage to help customers protect themselves from that risk. Today, they can streamline, speed up, and enhance this process by using all the resources of connected insurance: from IoT real time data to AI and machine learning capabilities, to predictive analytics (which we cover in chapter two). A data-driven approach, which provides a 360-degree, timely and up-to-date view of customer behaviors, helps insurance companies become proactive and enables risk reduction strategies through the design of value-added services that are delivered across existing and newly implemented digital touch points.
In data-driven insurance, digital tools allow profile data to be automatically uploaded to internal platforms, including CRM. From the company website to the app, from personalized mini-sites to interactive videos and social media accounts, the insurance company can collect and verify customer information, formulate a business proposal, empower the customer to make a purchase, collect a digital signature, and issue reports, summary and recap documents.
Underlying the data-driven approach is dematerialization, which provides organizations with complete coverage of digital processes of a fiscal and documentary nature, allowing them to be seamlessly integrated with the tools and procedures already in use. Electronic signatures, in particular, allow documents to be signed and completely digitize the process of acquiring signatures on contracts (policies, subscriptions, etc.).
To communicate policy expiration and digitize the customer journey, data-driven insurers can leverage their policyholders’ preferred channels (such as the smartphone). For example, they may choose to distribute to users via text message or instant chat an invitation to watch a personalized video.
Creating meaningful insights
By capturing real-time data, data-driven insurance companies are able to rapidly refine offerings and customer experiences and can extend the benefits that come from analytics by introducing interactive and personalized formats into customer care processes. In this sense, data-driven insurance promotes innovation that is not simply technological but first and foremost has to do with an inevitably customer-centric organizational culture.
Each policyholder has his or her own needs and expectations that must be investigated, listened to, and met. Learning about customers is the first essential step in being able to offer each of them the insights they really need. Doxee’s interactive experience transforms data into unique, interactive videos and dynamic, responsive micro-websites, enabling insurance companies to have real conversations with their customers and use the information gained from interaction after interaction to create personalized content.
The benefits of digitizing the customer base
With customer demands and expectations increasing and becoming more diverse every day, companies must look for the right software solutions and technology tools to maintain a high level of performance while delivering the highest standards of customer experience. Digitizing the customer base is an integral part of the transformation process that data-driven insurance has triggered.
The ability to collect data and insights through digital questionnaires and the receipt of feedback, the experience of expiration reminders, the subsequent renewal offer of a policy, the implementation of digital payment systems, and the administration of interactive transactional documents that are personalized based on the characteristics of each individual user: the digitization of all processes that affect users, starting with master records and inventories can boost insurers who want to learn how to communicate with customers in the most fluid, effective, and personalized way possible.
In the area of data-driven insurance, the integration of website, mobile-specific applications, and social networks has a twofold objective:
- to show in a transparent and user-friendly manner individuals’ consumption, where it comes from, and how it can be reduced;
- to enable the use of self-service tools by building simple, intuitive and tailored platforms that customers can use independently both to make requests for clarification and insights and to make payments directly online.
The benefits of digitizing the customer base are numerous: from offering up-selling and cross-selling content, to improving engagement and customer care, to reducing costs.
Offering upselling and cross-selling content
By digitizing customer service and developing an omnichannel approach, companies are able to offer upselling and cross-selling content.
According to a recent survey by global consulting firm Simon-Kucher, nine out of ten customers would prefer to purchase insurance policies from a single provider, provided the offerings meet their expectations. While even in the case of the insurance industry it costs a lot of time and money to attract new customers, there is nevertheless great potential for premium and cross-selling. What seems to be missing even today are coordinated efforts that are aimed at customer retention (eight out of ten customers never buy another product after the initial sale).
Because so many people would prefer to buy all their policies from a single provider, insurers should structure their sales funnels in a way that enhances all contact opportunities. And that means trying to connect even more intensively with policyholders on individual sales channels, rooting themselves deeply in their daily lives. Without access to real time data the changing needs of customers are bound to remain unknown, resulting in missing out on business opportunities, even important ones.
Improved engagement and customer care
In the case of data-driven insurance, omnichannel interactions with customers are nurtured, enriched and made more accurate through data. If traditional customer service methods are reduced to the use of spreadsheets, forms or checklists, which are often overly complex, the interaction with customer care can become particularly frustrating, especially if operators ask policyholders, repeatedly, for the same basic information. Service, due to the increased likelihood of human error, can be slow, ambiguous and inaccurate, resulting in an unsatisfactory customer experience.
Data, by enhancing call deflection processes, increases the customer retention rate. The point is that by automating manual customer service processes, the company saves time and resources in the long run, and it ensures a continuous flow of quality information that agents can use to improve routine activities and procedures. This eliminates the need for customers to provide the same information over and over again, and agents are free to focus more on initiatives directed at increasing customer engagement and less on lower-value operations.
Cost Reduction
One of the most important strategic benefits of data-driven insurance is the ability to streamline operations: by intelligently monitoring data, companies can optimize their activities in real time-from managing the pipeline to proposing additional products. In fact, a McKinsey report states that by automating even just the claims process, insurance companies can reduce operational costs by 30%.
The potential of data-driven insurance is virtually endless: by putting value on the data collected, any touchpoint, even the most annoying and “slippery” ones can become a tool for marketing and dialog with the user, can be valuable opportunities to improve the customer experience and consequently the engagement and loyalty rate.
