Responding better, faster and more individually

Customer behavior has changed significantly in the last few years. By now, customers consider the buying experience from Amazon or other marketplaces as perfectly normal – and they expect the same service from other industries. That also applies in the insurance industry, which is now being shaken up by FinTech providers and other young market players. They set themselves up as competitors to established insurers in more and more places or try to take over a part of the value chain. In spite of the failure of some new players, the customer interface continues to be exposed to numerous attacks. This means that the more traditional insurers lose their customers at these interfaces, the more difficult it gets for them to manage their customers and generate future potential. So many traditional insurers need an answer to how they should respond to these changes. They need to recognize the new requirements of their customers, for example, and offer individual, needs-based products and services to suit the situation and that work across all media. The basic requirement here is for them to mange the issue of data analysis, and the operative use of its results, with greater skill, speed and efficiency. This is a great challenge – as insurers often come from a less dynamic environment.

The age of customer data

Everything now revolves around customer data in the digital age. The gold of the 21st century is usually generated by the customers themselves – in their interactions with the service center, internet pages, smartphones, fitness bracelets, driving assistance systems or sensors in household appliances and voice assistants. This raw data, which also includes historic data (customer base data or data from contracts that are already over), is a valuable asset for insurers. They can gain completely new insights from this and address their customers in a more targeted way, develop new products, offer individual tariffs, open up new customer groups and also discover new business areas – whilst saving a lot of time in the process. To do this, however, they need to be ready to develop new knowledge with the aid of digitization and analytics solutions – and to factor in data assiduously from their cooperation partners. As it is only through analytics that all this data can be examined precisely and the results deployed for the benefit of customers in real time. A basic requirement for this is that there is clarity on the part of the insurer about which data may be stored and used cross-departmentally for legal reasons. As analytics works above all when it is firmly embedded in the entire organizational structure and process and consequently forms the basis of the digital business model. Only then does this procedure deliver results that can be deployed in many different ways and generate significant added value in all the key processes in insurance companies. This conclusion comes from the current “Insurance Monitor” study by PricewaterhouseCoopers.

The use of analytics in customer communication

In the past, insurers used the internet for giving their customers information. As a rule, consumers used this information for comparing insurance products online. But in the age of digital transformation, more and more customers are willing to adopt self-service offers from insurers and take over parts of the value chain themselves. With the aid of analytics, a claim for example can be processed more efficiently, cost-effectively and securely. The advantage for customers is rapid, un-bureaucratic processing. The advantage for insurers is that it can reduce their personnel costs for damage assessment and processing and protect themselves from possible attempted fraud at the same time – because objective third-party information (such as sensor data, weather data and image information) is directly incorporated in a damage report and helps to assess the extent of the damage precisely. Here are two examples that show how quickly and helpfully analytical methods can be in a damage event:

1. With a Smart Home solution, the heating system relays its data to the insurance customer, the insurer and the heating installer via sensors. On the basis of historic data – which can also be combined with third-party data (such as weather data) – the likelihood of damage occurrence or disruptions can be anticipated and warnings can be issued. Such proactive maintenance helps to avoid any unnecessary damage occurrences as well as any costs that result.
2. One vehicle drives into another in a traffic jam on a motorway. The insured customer immediately reports the damage to their insurer through an app and attaches photos of the damage to their report. Intelligent robot software immediately draws up an assessment on the basis of analytic methodology. To do this, the intelligent system calls up additional information through sensor data from the vehicle and consults third-party information on the weather and the traffic situation. The system also recommends a nearby workshop to the customer and the invoice is submitted directly through an online portal. The claims system then initiates settlement of the bill.

Creating added value by acting efficiently

These two scenarios clearly show how insurance companies can provide the best level of service through intelligent analytical processes. To do this, however, they need to connect to their customers in a more innovative and agile way – and on all channels. This connection starts with dialogs over the telephone, over companies’ own online portals and CRM systems and goes right through to social media, apps and third-party systems. Analytics then also provides new insights into customers’ current and future product affinities as, with the aid of analytical methods, points in time or life situations where these new products are needed can be identified from among the customers’ world of data. These analytical insights can, in turn, set up the customer management system with the next best actions for all relevant channels – and do all of this in real time, during a telephone consultation for example. Analytics is an enormous strategic opportunity for insurers to increase the success of their companies. If analytics is correctly deployed in customer management, it not only increases the turnover rate per customer, it also reduces the call processing duration, for example, or the number of customers shifting over to the competition – because the insurer is able to offer the right products to the right customers at the right time.

That is more than enough reason why analytics will become an even more decisive competitive factor for the insurance industry in future.

Author: Dirk Schäfer, Managing Director Analytics, Arvato CRM Solutions
Image: denisismagilov AdobeStock