Today, life spins on a digitised axis. Thanks to technology and digitalisation, there is a non-negotiable demand for personalisation. This has trickled down on insurance as well. Accenture studied that 88% of customers demand more personalisation from insurance providers. To keep up, insurers have to take up the challenge of delivering fast, adaptable and tailor-made coverage.
What is personalisation in terms of insurance?
Personalisation is a modern insurance model wherein insurers personalise the risk rating for each customer as opposed to the traditional method of mutually sharing the risk. The collection of customer data is at its core.
Earlier, the agent-led model was at the heart of the industry. However, customers now have extensive exposure to technology which has steered them into demanding insurance plans that envelope all their needs.
What does personalisation consist of?
As per Uwe Stuhldreier – an executive at HUK24 – “A personalised insurance engine enables quicker and simpler interaction and ensures each customer gets the most suitable product in line with his or her situation.”
Personalisation is the future of insurance. It is a device to enrich a company’s presence amongst its customer base while reducing costs and streamlining operations.
The most common features reflecting personalisation are as follows:
1) Ensuring real-time interaction
Customer expectations have mounted to new heights in terms of communication. Responding to queries in real-time with positive interaction is a basic demand. Companies can increase their sales by taking on an omnichannel approach.
According to The State of Connected Customer report, 84% of the customers say that the experience a company provides is as important as its products or services. Companies can adopt chatbots and AI to engage with customers at all times.
Further, providing instant expert support can certify a company’s presence. Smart Assist by Bajaj Allianz is a leading example of real-time assistance.
2) Recognising customer input
Using data to understand customer input and accordingly fill in further forms or make the experience more personalised can be an interesting use case. Customer data is fodder for the insurance field. Companies should emphasise getting data from all client-related processes. This will provide value to the customers and in turn, build trust.
Furthermore, pre-filling existing information eases the process of acquiring new customer data. For instance, Coverfox is an insurance brokerage in India that tracks website usage to offer personalized advertisements and autofill forms based on customers’ previous data entries.
3) Configuring and refining insurance products
As the CEO of AXA – Thomas Buberl says, “The key is to be where the customers are.”
Companies can keep up with changing customer preferences by making as much use of IoT as possible. According to WNS, application programming interfaces will help create insights-driven offerings as they integrate data from numerous sources.
Connected insurance is a concept that uses IoT technologies like lifestyle apps, wearable devices, etc. to form a direct connection between all the actors of the insurance ecosystem. This can be used to offer personalised products and also, to refine insurance products as per an individual’s needs.
Customer-centric analytics and patterns can assist in understanding clients’ values and triggers. For example, Progressive Snapshot, a US car insurer, uses a UBI telematics programme to monitor the driving pattern of its customers. Thus, premiums can be priced according to every individual.
4) Aligning coverage with customer behaviour
The pandemic caused a sudden shift in consumer behaviour. Instead of reaching out, they now expect the companies to approach them with products that meet their lifestyle choices. The era of one-size-fits-all coverage plans is coming to an end.
Personalisation focuses on the service factor and not the selling factor. Insurers must direct their resources to craft coverage plans as per the practices of the consumer to target a bigger audience.
As CS Sudheer, the CEO and Founder of IndianMoney.com, quotes, “Millennials understand financial liabilities and know the extent of cover they need. Insurers have launched several tailor-made insurance schemes to cater to this rising class of customers.”
The use of digital personalisation tools will help deepen customer relationships as customers will get more and more services that fit them and their needs. It might also start an era of hyper-personalisation where every insurer has the ability to quote or respond to customers with the knowledge of their situation.
The Hyper Automation market has been growing at breakneck speed and, according to Gartner, is expected to reach nearly US $600 billion in 2022.
Although automated personalisation will have an enormous impact on insurance, the industry hasn’t completely embraced it. It can shift the tedious task of gathering data from insurance experts to smart technologies, thus enabling them to focus their time and energy on providing quality-driven products.
To make seamless communication a reality, insurers ought to use a combination of technologies. One is the use of APIs, which connect multiple systems to allow them to share data easily, writes the Senior Vice President and General Manager of Salesforce, Raja Singh.
Automation tools will improve and integrate insurance infrastructure so that the entire insurance experience can take place on one platform.
Automated personalisation can transform insurance by increasing profits, adapting to changing customer habits and reducing insurance costs. Claims processing, policy management, and underwriting are a few domains that can benefit from automation.
What are the challenges faced in personalising insurance?
As profitable as it may seem, in reality, personalising insurance has its challenges. Some of the noteworthy challenges are discussed below:
1) Integrating customer data
Personalisation requires data that is boiled down to the individual level. It is important to ensure fool-proof integration of consumer channels to offer a unified service. With the recent advocation of customer privacy and crackdown on data mining techniques, it will be more and more difficult to gather data. It will also be very important to ensure the security of the data that the companies will have access to.
2) Privacy regulations and the cost of acquiring customer data
Personalisation is unlikely without access to customer data. However, in doing so, companies often face the threat of breaching privacy regulations. Such a level of personalisation will require data on an individualistic level. As per the current trends, it seems like it will only get more difficult with time.
Furthermore, if the cost of acquiring recent consumer data is too high then it might defeat the point of personalisation.
Thus, the customer journey has gotten more complex. To secure their future, insurance companies need to satisfy the growing customer expectations, while keeping profits in mind. Will personalisation become part of our lives or will it be one of those concepts that were better imagined?