There are big opportunities for life insurance providers to harness new technologies and data and analytic capabilities to improve the engagement with its customers and help engender trust, according to a new report by EY. The report, looking into what consumers currently think and how their needs would be best met, found that trust in the industry was currently low, with just over half (55%) of insured consumers – and 68% of uninsured people – having the perception that providers look for loopholes to avoid paying claims. This is despite the fact that more than 95% of all claims are paid by the industry.
The study, based on interviews with a nationally representative sample of 1,000 UK consumers, also found that cost and affordability was an issue for many, with just under half (42%) saying they either don’t think they need protection insurance or perceive it a waste of money. Additionally, 40% of uninsured people don’t think they can afford cover and 25% say that other day-to-day outgoings are more important. There were also disparities in how people of different ages responded to incentives and loyalty programmes, with 60% of under-35s favouring them, compared to 19% of over 55s.
Clive Allison, UK Insurance Protection Leader at EY, commented: “We undertook the research to really understand what people – both those who hold a protection product currently and those that don’t – think about protection insurance and what they’d like to see in the future.
“Perhaps the most significant findings were the perceptions around trust and value for money – which of course need to be tackled first and foremost – but the research also highlighted how people of different ages responded to different incentives and management tools. With all these areas it became clear how the intelligent use of technology, data and analytics was vital in not only helping to engender trust but also improving customer engagement and outcomes.”
Personal data – can help drive new products and services but needs to be handled carefully
Using personal data can help drive new products and services as well as more competitive premiums, but it is vital that this is done with sensitivity and organisations need to prove themselves trustworthy custodians.
Currently, there is some wariness. Comfort levels are highest with the use of motor insurance data (38%) and then fitness data (28%) and genetic data (27%) with the use of social data lowest at 19%.
One of the areas that technology could help in this regard is with activity trackers and health monitoring devices. These devices give customers control and flexibility and proof of health would give them access to better cover. It could also help improve value for money, with discounts and rewards linked to healthy lifestyles.
Flexible protection cover that ‘travels’ with you
The industry has already been exploring ideas around having protection that ‘travels’ with customers throughout life, that can be dialled up or down as needed. The research shows that the majority of consumers like this, particularly when they are in control and can make changes when their personal circumstances alter, such as moving house, when their income changes or if they switch from employment to self-employment – 65% say this is important to them.
However, many don’t like it when insurers recommend changes – only 17% say they would like to receive recommendations, and fewer still would like frequent communications (8%). There are some customer segments that buck the trend though. Around a third of younger and middle-aged consumers (34% and 26% respectively) say they would like to receive recommendations monthly or every couple of months.
Technology, and particularly predictive analytics, could not only help identify these customers but could also help improve their experience by making the services more relevant to them. It could also help build trust by flagging when they might have shortfalls in cover. Another opportunity would be ‘event-based protection’ – creating a single interface allowing product bundling at the time of a life-event (such as buying a house) which would give consumers control of their insurances, and provide them with additional simplicity; for instance, policy application data could be shared by multiple insurers.
Protection-as-a-service, not a product
There is also an opportunity for insurers to move from the concept of selling financial products to providing customers with an ongoing service. Life insurers for instance, could move away from simply being the provider of a product that pays out in the event of a claim, to offering a service that could help prevent illness or death in the first place, passing more control to customers and building engagement. Using a combination of technologies such as wearables and advanced data analysis tools, lifestyles can be analysed to design services that provides them with health updates and lifestyle advice.
It could also be extended into post-claim client interactions. This would be especially beneficial given nearly half of claimants say they were not particularly satisfied with the claims process. For example, smart-contracts using blockchain technology could help automate and speed up claims payments. And digital passports could speed up beneficiary identification and verification, also making claims simpler and rebuilding trust.
Clive Allison concludes: “There are real opportunities – using current tech innovations – to improve interaction with, and empathy towards, customers and improve their overall experience. However, to make the most of these opportunities, a shift in focus is needed – away from educating people about complex protection products to designing simple protection services that customers need and want. While no one silver bullet exists, our research has revealed the need to better understand the customer and their relationship with protection products.”