Analyzing Your Data to Improve Insurance Customer Experience

11 September 2018|Customer Experience, InsurTech|

Big data is driving digital transformation in the insurance industry, improving customer experience for greater retention.

To a generation who grew up online, experience is everything. From easy sign-up to quick claims, customers are expecting more from their insurer. Companies that fail to innovate risk being left behind by more forward-thinking competitors and insurtech newcomers.

The numbers back it up. According to McKinsey & Company, U.S. auto insurance companies who offered the best customer experience were 30 percent more profitable than, and experienced two to four times the growth of, their slow-to-adapt competitors. Satisfied customers are 80 percent more likely to renew their policies.

What customers want

These digitally-driven insurers must have done something right. Happy customers may recommend a company to friends but unhappy customers, well, that can turn into a social media disaster.

But what exactly do customers want? That is not an easy question to answer.

“Identifying what drives customer satisfaction and translating it into operational performance improvements requires deep customer insights, solid analytics, and modeling the most important customer journeys, with cross-functional ownership and multichannel, end-to-end management,” McKinsey notes. This is where big data comes in.

“Identifying what drives customer satisfaction and translating it into operational performance improvements requires deep customer insights, solid analytics, and modeling the most important customer journeys, with cross-functional ownership and multichannel, end-to-end management.” – McKinsey

Don’t just collect data. Use it.

“Data is great and it helps you listen, but fundamentally, the key thing is to understand,” states Oke Eleazu of Bought by Many.

“Data is great and it helps you listen, but fundamentally, the key thing is to understand.” – Oke Eleazu, Bought by Many

McKinsey gives the example of a company whose customers complain of long wait times. The clear path forward would be to hire more customer service agents to reduce wait times, but the company soon realizes from their data that call centre wait times are almost instantaneous.
So what is going on? The customers are clearly unhappy, so the real problem must relate to how their problem was resolved. Instead of focusing on hiring more workers, the company should instead be improving their workers’ communication skills.

Analyzing data can help discover where the real problem sits. It can also help determine which customers are venting some steam and which are about to jump ship.

Says Eleazu, “If you understand your customer really well then if you can create products, services and access that meet those needs, and you can thereby interrupt a market that has pretty much been steady for 300 years.” If you fail to do this, someone else will.

“If you understand your customer really well then if you can create products, services and access that meet those needs, and you can thereby interrupt a market that has pretty much been steady for 300 years.” – Oke Eleazu, Bought By Many

Data to improve customer journey

Companies often slip into a focus on segments: marketing, onboarding, renewals, claims. To customers, however, it is one big journey. Data can not only find pain points along that customer journey but link the segments together for a seamless customer experience.

Prudential is one life insurer combining artificial intelligence and machine learning to improve customer experience, among other uses. In Korea, for example, they automated close to half of their new policy underwriting in 2015, dropping costs by about 70 percent. This began with using data to determine the information that mattered, and the information that did not. Prudential’s data analysis dropped the percentage of new customers needing a medical exam from 15 to 5, improving customer experience by removing the hassle of visiting a doctor.

Prudential’s IBM-powered chatbot in Singapore not only helps their financial consultants quickly access customer data but can return a quote in three seconds. “We want our human advisers to become prime users of our robo adviser, so they can tune in even better to the actual needs of their customers,” says Global Head of AI Michael Natusch.

“We want our human advisers to become prime users of our robo adviser, so they can tune in even better to the actual needs of their customers.” – Michael Natusch, Prudential

Data to improve pricing

Not only can data improve the customer purchasing experience, it can improve pricing by offering better insight into risk. Although lower prices are not all a customer looks for in an insurance company, when it means affordability versus being priced out of the market, lower prices can make all the difference.

Flock is one insurtech startup that took this route. “The problem we’re solving in the drone industry is that drone flight risks are unpredictable, complex, and not particularly well understood by insurers,” explains CEO Ed Leon Klinger. “The result of this is overpriced, cumbersome, but often compulsory insurance policies that are not fit for purpose.”

“The problem we’re solving in the drone industry is that drone flight risks are unpredictable, complex, and not particularly well understood by insurers.  The result of this is overpriced, cumbersome, but often compulsory insurance policies that are not fit for purpose.” – Ed Leon Klinger, Flock

The drone-focused insurtech combines local weather data, population density, proximity to dangers such as an airport, and other data points to assess risk for each flight. Lower-risk drone pilots benefit from an affordable pay-as-you fly price, but they also get feedback on flight risk. This provides added value for the customer and helps them determine if they really want to take that storm-chasing flight after all.

The future of data in insurance

GDPR regulations and other privacy rules around the world do pose challenges to using customer data. However, providing your customers with value encourages them to opt into sharing their data with you: a win-win for both.

In a customer’s lifetime, they may generate a million GB of health data, and in the near future, cars may be producing 350 MB of data every second. Insurers must do more than access this wealth of data: they must use it.

In a survey of banking leaders, 74 percent say their analytics are driving significant increases in customer retention and loyalty while 54 percent report significant growth and revenue generation.

“The use of data and being able to offer a truly digital customer experience are both critical for the insurer of the future,” emphasizes Anirban Bose, global head of financial services at Capgemini.

“The use of data and being able to offer a truly digital customer experience are both critical for the insurer of the future.” – Anirban Bose, Capgemini

Like bankers, insurers who drag their heels on analytics are missing out this growth opportunity.

The Aluance Digital website uses cookies and holds certain information. Read our Privacy Policy to learn more. Ok