Other parts of this series:
The new digital economy is, without doubt, shifting the balance of power between organizations and their customers. Consumers are increasingly using social media to shop around for the best deal. And they’re quick to change if they find something better.
Insurance customers are no exception. To retain customers, and hopefully attract new policyholders, carriers need to change their focus. The traditional emphasis on developing and delivering new products and services must give way. Insurers need to focus, first and foremost, on their customers. They must understand them better than ever before. They must be acutely aware of their needs and aspirations. And they must have a good knowledge of the key influences that affect their choices.
In my previous blog I highlighted the large number of insurance customers who crave personalized services. They want products and services that address their specific needs.
Insurers have no option but to satisfy this demand. If they don’t they’re going to lose customers – lots of them.
Digital technology is pivotal. It enables insurers to track closely the behavior and preferences of their customers. Such information is essential if carriers are to meet the demands of often fickle policyholders.
However, there is another source of valuable customer information. One that’s often overlooked. The customers themselves. We’ve found that 82 percent of insurance customers are willing to share data about themselves if it helps optimize their cover. Furthermore, 78 percent are prepared to give insurers such information to get more personalized service.
Insurers need to be alert to this. There are all sorts of ways to encourage customers to share data – premium discounts, rewards and enhanced services. Probably the most powerful tools to gather customer data are connected insurance and social media.
Connected insurance is especially on the rise. It now represents close to 10 percent of car insurance premiums in the U.S. It’s close to this level in Italy. A client I recently visited in Italy has ramped up new business dramatically through connected insurance. It represents 100 percent of its new business with one of its distributors. This is clearly a good way to avoid taking on bad risks and it’s an approach that is likely to grow very quickly.
As the cost of car telematics continues to fall, because on-board devices and tracking systems are becoming less expensive, the business value of sharing driving behavior is rising steeply. Benefits include:
- Improved targeting of customers for value-added services and special premium rates.
- Enhanced risk selection.
- Greater engagement and intimacy with customers.
- Revitalized customer relations that are constant, dynamic and flexible rather than infrequent, ad hoc and static.
This is good for both parties. Customers enjoy constantly improving services that match their personal needs. Insurers secure long-term customers who are likely to buy further products.
In my next blog I’ll discuss some of the obstacles insurers face when striving to deliver personalized services to their customers.
For further information on the power of personalized insurance services read: