In today’s market, data availability isn’t the issue. It’s how you use it to underpin sustainable and profitable growth that’s the real challenge for insurers.
This is against a backdrop of variables impacting claims frequencies and the changing needs of customers including the rising number of millennials who want to be treated in a different way to previous generations.
There is a vast amount of data in the market which is a challenge for insurers as they need to be able to use data effectively to adjust quickly to the changing market dynamics.
As an example of the effectiveness of data to smooth the customer journey, in the US, Auto Data Prefill was introduced around nine years ago. Regardless of distribution channel, when a consumer enters their name, address and date of birth, the rest of the insurance application is populated automatically. A process that previously took on average two and a half phone calls to collect, now takes less than two seconds using Data Prefill.
Currently 79% of the market in the US use this application. But far from creating a level playing field, three different tiers of sophistication in the way this capability is used have emerged:
In the first tier, the insurers do not use this data set at all and just ask the consumer what level of coverage they want to purchase. In the second tier, the insurer displays what level of coverage the consumer has on their existing policy, and can provide a quote for a like for like policy. In the third tier, insurers show the consumer what coverage they currently have, but identify what they actually need.
The insurer therefore engages in more consultative selling, helping the consumer find the right product for their needs. This really demonstrates the level of engagement that can be achieved through the smart use of data.
The next step in prefill is via mobile technology. The customer simply takes a picture of the barcode on the back of their driving licence and this allows us to decrypt and extract their details to prefill the application.
These solutions are only possible through the contributory databases supplied by insurers and hosted by LexisNexis. But they show what can be achieved when you think about data in new ways and consider how it can be used at each stage of the customer lifecycle to create competitive differentiation.