Sara Costantini, Regional Director for the UK & Ireland, CRIF, takes a look at how the insurance industry can make a positive contribution to fighting the cost of living.
Ever-rising bills now mean thousands of households are cutting back on non-essential spending, with many feeling they have little left to cover regular outgoings.
Amongst these non-essential spending cuts are insurance services. In fact, a recent study suggests that the crisis is causing more than four in ten (43%) insurance customers to cancel policies when seeking to cut costs.
This is alarming. The insurance industry is a sector often acting as a force for good. In fact, I would consider insurance services as being a core safety net of society, an essential service there for people when things go wrong. And in the context of the current cost of living crisis, the insurance industry has a more important role to play than ever. If a person suffers an accident, injury or loss, and they’re not covered by insurance, they could be footing a hefty bill and end up owing money that they just don’t have.
But a volatile economy means disrupted consumer finances. Families that would once have described themselves as comfortable are bracing themselves as they face ever-increasing higher living costs.
In times of economic crisis it is reasonable to assume that households will re-evaluate their expenditures and set new priorities. While this may include forgoing pay-per-view subscriptions or gym memberships, insurance companies mustn’t allow themselves to fall into this category.
Now, more than ever, insurance firms should be stepping up to the plate to support their customers in these tough times. They should recognise the changing economic landscape and adapt accordingly. It’s time for the insurance industry to prove its worth.
With changing consumer finances, insurance companies must offer their customers solutions that work for them, moulded to their specific financial profile, and fitting in with their specific financial needs.
Insurance cover that fits an individuals’ – or family household’s – financial profile will not only suit the beneficiary or beneficiaries but will also enable insurance companies to stand out from the crowd in what has now become a highly competitive industry.
Like most sectors that have seen consumer adoption of digital technologies accelerate over the last few years, the insurance industry is undergoing a major transformation, with new technologies and business models making it possible for insurers to offer highly flexible and personalised coverage.
And I see open banking – the process of sharing financial data between institutions to provide customers with faster onboarding as well as better and more tailored financial services – as the natural progression when it comes to the development of the insurance industry.
Open banking technology has the potential to bring many benefits to insurers, not least helping those who embrace these innovations to stay ahead of the curve and offer a better service to customers than their competitors, attracting and retaining customers in the process.
Insurance companies can use open banking to access financial data from their customers, such as spending patterns and credit history, to understand their risk profile better and provide more personalised insurance products and services.
By analysing this data, insurance companies can create more customised products that better meet the needs of their customers, ultimately leading to higher customer satisfaction and loyalty.
An example would be motor insurance, tailored to an individual who makes monthly payments towards a car lease. From open banking data, the insurance provider can take a 360-degree holistic view at that individuals’ finances to better aid decision-making and offer them a monthly payment scheme best suited to their outgoings and spending patterns. A tailored service would mean that that individual would be more likely to stick with their scheme and be covered should anything go wrong. Ultimately, it’s a win for both the insurer, and the person that’s covered.
But the benefits for insurers don’t stop there. Open banking technology also simplifies the application and onboarding process, saving consumers time when applying for insurance, driving up satisfaction, and ultimately enhancing customer loyalty.
At CRIF, we have been supporting the UK insurance industry for 25 years, providing open banking solutions that empower insurers to harness new data sources, deliver seamless customer experiences and adapt to changing consumer demands. And from our experience we know that in times like this adapting is key.
If the insurance industry really wants to continue its force for good legacy, it must recognise this and take the appropriate steps now to help consumers across the country during the cost of living crisis.
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