By Alex Foster, Director, insurance, wealth management & financial services, BT,
We are seeing huge change within the insurance world in terms of data, customer experience and regulation, and technology is helping insurers considerably to adapt to these significant shifts in the operational landscape.
The personalised insurance model has become an instrumental theme as it allows businesses to form closer relationships with their customers, making the customer feel the insurer is able to really grasp their needs whilst also enabling the insurer to provide relevant services with greater ease. According to a study in 2019, over 80% of consumers are willing to share their data to obtain personalised services, a figure up from only 57% in 2017, so the interest is also clearly there on a consumer level for personalised insurance.
This sentiment is further reflected by the rising demand for personalisation within the industry, with customer centricity being a key driver. Personalisation enables insurers to achieve a better retention of customers, having built more in-depth 1-1 relationships, as well as cutting the cost of acquisition to aid revenue growth. Furthermore, if personalisation leads to better sharing of data, such as in telematics car insurance, a benefit to the insurance industry and society as a whole would be safer driving and saving on premiums.
At BT, we’ve worked with our clients in the insurance space to develop a ‘Personalised Video’ solution, underpinning insurers’ existing data, which, when delivered, is giving a truly personal output that provides insurance users with a clear understanding of what they are acquiring and gives greater clarity into why they might need such solutions.
Reward over risk
However, any move to personalisation and away from pooled risk is changing the traditional model to one where there is a potential risk for some customers to be priced out of insurance. That said, it could be an opportunity for “AI Insurance” – dynamic, metered, ever-evolving insurance – one where trust is at the centre, allowing customers to know that the insurer will charge them appropriately in that moment with pricing that fluctuates based on the data paired with the circumstances.
Personalisation incentives based upon longer term customer behavioural changes could also mean that insurance companies will be able to create offerings that align incentives and protection leading to long-term partnerships, rather than a short-term contract.
Security is key
With data being a core theme in terms of enhancing customer experience, the risks and regulatory safeguarding are natural considerations when looking to successfully implement personalisation within the insurance industry. Ensuring the security of sensitive consumer data is paramount and to this end, BT operates 16 cyber security operations globally to help inform and protect businesses from cyber risks. Established insurers also must be extremely vigilant as they take steps to move away from legacy technology and develop new technology solutions. So, while as an insurance industry we would love to obtain ever more data from personalised insurance, the question of WIFIM – “What’s in IT for Me” – always needs to be answered for customers.
Looking to the future
The introduction of 5G could enable a whole new world of personalised insurance services that are yet to be imagined or supported using today’s technology, especially when combined with the Internet of Things (IOT). For example, autonomous vehicles could leverage a 5G network to communicate and share date with an insurer in real-time, taking usage-based insurance to the next level.
Similarly, for health insurance the nature of 5G and connected devices will enable further data to be communicated from patients to healthcare professionals and insurance companies, also helping to provide accurate personalised quotes for health insurance. This will likely have significant implications for the economics of insurance, too.
Overall, advancements in technology and the range of data now available to insurers provides the opportunity to introduce a more personalised consumer experience, and whilst there are of course challenges, the potential rewards certainly outweigh the risks.