The past year has demonstrated to the insurance market the value of honing data strategies and achieving the Single Customer View to better serve existing customers, identify new markets and help drive product innovation. With changes to pricing practices on the horizon, gaining an aggregated, consistent and holistic representation of the data held about a customer would also offer insurance providers a clear advantage when rating for risk.
However, achieving the Single Customer View is easier said than done.
Consider the volume of merger and acquisition activity in the insurance market over the past few years; the challenge of legacy systems with customer data stored in separate silos; the high levels of switching. Customer Data Management has become one of the market’s major pain points.
It is ironic that while M&A activity can provide a route to gain a competitive edge, it also presents what could become a reputational challenge through the customer data that needs to be assimilated and integrated within the business. Get it wrong and the risks can be far-reaching.
The insurance market has many moving parts. This has created the problem of consumer data being stored in multiple silos – application, quote, claims, marketing – making the management of this data very difficult. It therefore risks becoming outdated, incorrect and inconsistent.
One of the biggest barriers to good customer data management occurs where an insurance group has grown quickly over a number of years without a defined data strategy. Individuals may end up appearing multiple times across disparate customer databases within the same group with no link being made between records.
If an individual changes address, changes their name or their name is recorded in a slightly different way, the ability to link the data becomes even more problematical. So, when Mrs Jones-Smith applies for motor insurance today the fact she is the same Mrs J. Jones who applied for Home insurance six months previously and is also the same Mrs Jane Jones who had a claim as a named driver on her husband’s policy last month, could be missed. Failing to connect these customer records into a Single Customer View can lead to wasted time, money and lost custom.
It stands to reason that most people get frustrated if they feel unvalued as a customer and feel aggrieved if they have to repeat information about themselves to different departments within the same insurance group or brand. That can be a reality without a Single Customer View.
Getting facts about the customer wrong in a digital environment is also damaging for a brand and creates service inefficiencies while duplicate or outdated consumer information can lead to inaccurate pricing and may open up the insurance provider to fraud.
From a marketing perspective, without the holistic perspective, insurance providers risk wasting marketing budgets, while missing valuable cross-sell and upsell opportunities.
However, with 2021 expected to bring a further increase in M&A activity, insurance providers can now overcome these barriers using patented linking and matching technology in combination with over two billion pieces of insurance data to match disparate identity information with a high degree of accuracy.
By joining the dots to match up disparate data, then assigning a unique ID for each individual, insurance providers will know if they are quoting an individual that holds another personal lines policy with them; if an individual making a claim against a policy was a previous customer or a named driver being added to a policy used to be insured by them.
This is just a start, once you have a comprehensive and accurate representation of a customer’s identity, it can be used at every touchpoint and provide the basis for all future dealings with the customer with new data adding to the profile to ensure it reflects any change over time.
Knowing with confidence renewal dates, policy history, claims history and correct contact information enables insurance providers to offer a more customised and relevant service to customers with the ability to carry out effective communication at all stages of the customer journey, and in-turn cross sell relevant products at the right time.
Also with a Single Customer View at their fingertips, insurance providers are in a stronger position to understand the lifetime value of a customer which can help drive direct marketing programmes.
Finally, with a fuller understanding of the overall risk of the individual and their assets at point of quote and point or renewal, insurance providers can price with improved confidence.
The coming regulatory changes are putting insurance providers under increased pressure to understand the changing needs of their customers and to price fairly. That starts by maximising the data they already hold through ID matching solutions, giving insurance providers the power to perform true customer data management.
By James Burton, senior director of Product Management at LexisNexis Risk Solutions UK &I