May 16, 2019

How to Win and Grow Through Customer-Centricity in P&C Insurance

The IBI Team

Topic:   Industry Focus

Last updated: July 30th, 2020

As modern insurers address the challenges associated with changing customer attitudes and shifting risks, they need to find new and better ways to compete – particularly against larger firms. This requires much more than just efficient claims processing or better pricing.

They must become truly customer-centric. They have to learn what works, and how to carefully select and engage with their next set of customers. To accomplish this, they must have deep knowledge of customers and their segments, to uncover the best way to maximize retention while keeping growth, loss ratio, and related metrics in line.

The key to customer-centricity lies in data and analytics. Business-ready information can drive profitability by helping insurers know their customers, understand product and risk changes, identify profitable growth opportunities, and understand the factors that impact loss ratios.

Customer Attitudes Are Shifting

  • Consumption patterns are changing, e.g., urban living with reduced car ownership
  • Google, Netflix, Uber, and Facebook all use data to improve user experiences – and customers expect more of that
  • Instead of being limited to basic protection, insurance is expected to provide advice: better alignment of consumer needs and behavioral change
  • Expectation of IOT-like experiences on mobile devices

Risks are shifting, too. Modern insurers are dealing with changes in everything from security risks to terrorism to self-driving cars. With risk changes, your segmentation and pricing models need to adapt – or your profitability will suffer.

Competing for profitable growth – especially against larger firms – requires more than just better claims processing. Your biggest opportunity? Becoming customer-centric.

Competing for profitable growth – especially against larger firms – requires more than just better claims processing. Your biggest opportunity? Becoming customer-centric.

  • Competing strictly on price will ultimately fall to the companies with the most data and the best data scientists
  • Profitable growth in a niche market, such as farm bureau, specialty, or reinsurance, requires intimate knowledge of what works – and careful selection of, and engagement with, your next set of customers
  • Deep knowledge of customers and their segments provides the best
    way to retain the best customers while keeping growth, loss ratio, and related metrics in line

What You Need Starts With Data

  • KPIs (e.g., loss ratio, earned and unearned premium, etc.) are needed in different business units – but should be based on consistent data
  • Detailed data is needed for analysis of pricing, segmentation, marketing, and service
  • All of this requires a unified, historical view of your business
  • The data can’t be limited by existing, product-oriented application silos, because you need clean, complete, business-ready data on every business subject

Creating a powerful, easy-to-use business interface with a single company view for pricing, risk, underwriting segmentation, and claim visibility ensures confident data at all levels. Business-ready information should include, at a minimum, claims, policy, finance, customer, and channel.

The result? Optimal price with personalized service. Fast, easy, fact based decisions. Auditable and repeatable.