It’s no surprise that many goods and services are now purchased using digital technology. In fact, there aren’t too many of us that still buy CDs and DVDs, go to a bank to make a transfer, or organize our holidays through a travel agent. With worldwide online retail sales forecast to nearly double between 2016 and 2020, and as 51 percent of Americans prefer to shop online, enterprise digital transformations are becoming a necessity.
Highly popular with the great majority of consumers, digital technology also leads to changes in purchasing behavior. With products more easily comparable as consumers become increasingly information rich, the addition of personalized and associated goods and services that are digitally accessed and delivered becomes a differentiated value proposition — one that represents far more than just a product and a price. The insurance sector, in particular, has a pressing need to undergo digital transformation to embrace the online purchasing behaviors of consumers and their appetite for more customized offers and services.
Why Being Product Centric Has Become an Outmoded Strategy
For the last 50 years, insurers have been selling products in bulk to customers and distributors. This product-centric approach structured by specific product lines, such as car insurance, house insurance, supplementary health insurance or life assurance, is based on a legacy data that is organized in silos. Today, customers no longer want to fit in with the offer. They expect personalized products and services that are available digitally: two phenomena that are driving insurers to change from a product-centric to a customer-centric approach. Insurers are now reflecting on the lifestyles and experience of their customers. Insurers are also reviewing their own processes, IT architecture, and organizational and business models to make sure they are keeping pace.
More than an evolution, this is a genuine revolution for insurance companies because unlike other industries that were born with the internet, insurers need to adopt a disruptive approach to customers and business models based on new customer behaviors. Start-up Metromile, for example, lets customers pay per mile for insurance. This customer-centric approach, is just one example of how traditional insurers can respond, and preferably anticipate, new customer behaviors and demands.
A New Policy – How Insurers Are Digitizing and Customizing
In a few clicks, customers considering buying insurance want to be able to obtain an estimate, take out a policy and engage customer support if they have any questions. This is an important aspect for digital consumers, who are looking for instantaneous exchanges with their insurance companies. A customer who has had an accident expects to be able to file a claim as quickly as possible via several possible contact points, including the insurer’s website, a text message, chat or social media. In addition, the customer wants personalized offers. A Deloitte study carried out on car insurance with 15,000 consumers found that more than 50 percent of respondents were ready to share their personal data to benefit from free road insurance, automatic emergency assistance, location in the event of car theft or free car services. In exchange for divulging their personal data, customers expect offers that not only meet their needs but also are dynamic – that is, able to integrate changes in their situations to develop the offer over time, such as a birth, moving to a new home or purchasing a new car. This desire to share data in exchange for services also applies to the medical insurance sector, where an increasing number of policy holders are willing to provide health information in exchange for a price adjustment more relative to their profiles.
Protecting Profits by Taking a Customer-Specific Solutions Approach
Insurers can go one step further in the customer experience by offering a solution-centric approach, where the aim is to respond to specific customer problems. Where safe journeys are concerned, for example, the insurer can propose a solution incorporating all the safety-related aspects of professional and personal travel, travel insurance, and third-party offers linked with travel. Health insurance could integrate a whole range of personalized services linked with the insurer or its partners to address specific needs of an individual or company. For example, increased musculoskeletal coverage for those who lead active outdoor lives or remote monitoring services using sensors or online access to health and wellness expertise.
Today, the challenge for insurers is to give greater value to their insurance contracts by offering more individualized products and services that are presented from the customer’s perspective, rather than from that of a line of business/product perspective. This means they need to develop platforms that design and develop new offerings around which their partners’ offers can coalesce. Insurers then deploy tools that actively manage a customer-centric view built from information gathered across the enterprise. Master data management (MDM) solutions are often a core component in developing this new customer-centric position as it bridges the gap between legacy and newer information sources and systems. MDM supports a change from a silo-based information structure to one that represents a digital core of information that can be integrated at a moment’s notice to new, sometimes disruptive business processes — a sine qua none in a digital strategy.
About the Author:
Darren Cooper is Director of Industry Solutions at Stibo Systems, the provider of Business-First Master Data Management (MDM)™ solutions. He has spent much of his career in software sales consulting, working in a variety of industries. During the last 15 years, he has specialized in information management, advising global blue-chip companies on their data governance strategies. Today, Darren provides leadership in helping Stibo Systems grow its business by demonstrating how its unique technology can help accelerate its customers’ digital transformation journeys. For more information, visit www.stibosystems.com.