Insurers who want to turn data into profits should ask the following five questions:
In this series, I spoke about data monetization and how insurers can turn digital disruption into an advantage for both carriers and customers. With profits of $6-8 billion at stake, data monetization could be just the thing insurers need to tip the scale back in their favor.
However, many carriers lack the necessary skills and resources to access these streams of revenue. They’re sitting on a goldmine of untapped customer information, yet many are failing to compete effectively with their rivals in this marketplace.
So what can insurers do? In the third post in this series I mentioned two companies—Tesco and Vitality—that have successfully turned information to their competitive advantage. Not only do they know what their customers want through the scientific study of their spending behavior; they also know what they are willing to spend money on and how they feel—and react!—when they are being rewarded for making healthy choices.
Accenture Strategy has identified five key questions that insurers need to ask in order to develop a vision of effective data monetization:
1. What is the market and business value potential?
Insurance companies need to begin by ascertaining how the market will evolve and what the major business and technology trends are. In so doing, they can determine the key risks and challenges, as well as business model success factors, target customer segments, the total market size and the potential monetization value—including how their data might be applied to other industries they could sell it to.
2. What use cases, data and insights will generate the business?
To define the value proposition, insurers need to identify the most attractive use cases and target customer value drivers. Then they need to determine what data and insights can be used to realize these use cases. They also need to identify which industries to target first, as well as which of their existing data assets could be used and how valuable they are.
3. What ecosystem partnerships should be formed?
Determining the go-to-market approach for data monetization includes an explicit ecosystem partnership strategy. Determining what platforms to play on, or which partners can enable market access, is a key success factor.
4. What capabilities are needed to deliver insights and use cases?
Insurers need to establish which analyses are required to produce the insights they expect. They also need to determine how to structure and deliver the data, including the technical requirements such as customization, aggregation, level, frequency and sophistication. The business capabilities and skills needed must also be identified, as well as how best to access these—internally, externally through partners, or through talent acquisition. Additionally, insurance companies should determine how to manage data privacy and security as well as warranties and liabilities.
5. How should the business model and capabilities required be implemented?
Specific activities and initiatives should be formulated and quick wins should be identified, as well as an implementation approach that includes tactics such as pilots, market tests and sprints. The organization structure and resources required should be defined and the entire plan should be evaluated against other initiatives in the business.
Insurers are facing an enormous opportunity, but in order to rise to the occasion they need to be proactive. They need to look outside their traditional industry and develop new innovation capabilities. The insurers who will lead in the new will acquire new skills sets and knowledge of markets beyond their own. Creativity is key for effective data monetization.