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Roundtable: Reimagining and improving the insurer-policyholder relationship

endava roundtable
Back row, l-r: Dylan Bourguignon, CEO, So Sure; Daniel Robinson, delivery partner, Endava; Andrew Jones, head of express claims, Zurich; Rob Munro, consultant, Endava; Paul Gambon, sales and marketing director, Medicash; Simon Hughes, group head of data & analytics, Markerstudy; Peter Graham, CEO, Kudo Insurance; and Paul Harvey, CEO, Adiona Insurance. Front row, l-r: Liz Latter, CEO, Qlaims; Jimmy Yan, head of business/ underwriting department, China Taiping; Ian Cassley, business development manager, Endava; and Marianne Stevens, head of accident & health, Collinson Group.

Gamification, actionable insights and/or relevant rewards. These were among the options considered at a recent roundtable hosted by Post in association with Endava to help insurers build deeper and longer relationships with their policyholders.

Improving customer loyalty and cultivating long standing relationships with policyholders is proving elusive for personal lines insurers.

This difficultly has been compounded by aggregators/price comparison sites and more aggressive advertising, spurring customers to shop around for the best deal.

Consumer “stickiness” could be limited even further with the Financial Conduct Authority confirming that its ban on price walking, intended to eliminate the so-called “loyalty penalty”, will come into effect on 1 January 2022.

But could the effective use of policyholder data be a bridge to rekindling these relationships and making them last beyond renewal time?

Struggling with data

So, why have insurers traditionally struggled to fully utilise the data at their disposal to create deeper connectivity with policyholders?

Kudos Insurance CEO Peter Graham said: “I can give five reasons: legacy systems, data inconsistencies, intermediation, people generally disinterested/distrustful of insurance and a lack of product differentiation.

“I’ve been in big organisations where they have got tonnes and tonnes of data, but they cannot make any sense of it whatsoever. They embark upon data cleansing projects, trying to bring it all together in one source and after two years and too much money it’s abandoned as it’s just an impossible task. So, for a lot of the big incumbents, it will be a massive, massive hurdle.”

“Insurance is a need not a want”, continued Simon Hughes, group head of data & analytics at Markerstudy. “It is something that we have to have so it is harder to engage with the customer as you’re not really providing something they want.

“Secondly, there is loads of data out there. I can give people any data they want but what are you going to do with it? That’s part of the problem. Technology has matured way beyond what businesses know what they want to do with it.”

Jimmy Yan, head of business/underwriting at China Taiping, added: “I wouldn’t say insurers struggle to use data as insurance is based on data, probability and statistics. But how to use data in a commercial way? It is a depressed purchase. Nobody wants to touch insurance so how do you attract them? If you analyse a businessperson’s behaviour, it doesn’t mean they are going to buy your product.”

Engaging with customers is key to forming any sort of relationship, so what is the best way to go about this?

Graham argued that no customer wants to engage with an insurance company. He said: “The only instance where they would do that is when something bad has happened, that they’ve had an accident or got ill. Insurance is one of those products that consumers buy in the hope they will never have to use it, so the idea of engaging with an insurance company is a bit of an anathema.

“The challenge is getting consumers to understand what the real value in insurance is, because most people will go to price comparison sites and buy the cheapest thing. They are reaping what they are sowing then. The margins are so thin in the main that providing great service on the back of that is really tough.”

Customer engagement

Dylan Bourguignon, CEO at So Sure argued that you don’t engage with a customer and create a relationship with a customer through data: “A You Gov survey two years ago highlighted that 68% of adults in the UK believe that insurers will do everything they can to not pay out genuine claims. If the industry doesn’t stop and think ‘there’s a real problem here that we need to address’ then fundamentally all we are doing is moving around deckchairs on the Titanic.

“Until we address the fundamental reason why consumers distrust insurers, it will not be resolved. There is no other easier way than ripping up the value chain and redesigning it to be consumer-centric, which is what we’ve done.”

Andrew Jones, head of express claims at Zurich added: “I think you have to ask; ‘why do policyholders end up feeling like they are treated like a fraudster?’ This does come back to data, or a lack of it, from a claim’s perspective. We end up having to review the underwriting process and get further information which should be known up front when citing different data sources, to know the policyholder before you take them on and preventing difficult conversations further down the line.

“Also, maybe how you interact with them during the lifecycle of the policy? Things such as, if there is a term and condition in the policy that says the vehicle needs to be parked in a specific garage, yet you have access to data that says we can see he’s not had a claim yet he’s not parking his car where he says he is. If you have that level of access to that data, you could potentially inform them before getting to a position of the car being stolen or vandalised.”

“There is a challenge where there as a lot of that information is captured front-end, but insurers don’t have that information available to them at claim time”, explained Qlaims CEO Liz Latter.

Endava consultant Rob Munro said the entire language and paradigm around insurance needed to change first and be truly customer centric.

He commented: “Part of my concern around data is that if you always do what you’ve always done, you will always get what you’ve always got. The industry is so entrenched in Europe and the UK, which is 300 years old. We are still using the same language.

“We haven’t shifted so we need to think about it differently. It is not insurance. It is protection. I want to be protected from an adverse event. I don’t want to make a claim. I want my rightful entitlement to the cash I need to protect myself with.”

Daniel Robinson, delivery partner at Endava, added: “It is the start-ups coming along that are shaking the tree a little bit. I do think mainstream insurers’ thinking has caught up. Data for me is a way for insurers to catch up.”

Deeper connectivity

While insurers may want a longer relationship with their customers, how can they foster that deeper connectivity?

“If there is no connection, it’s just a transaction”, explained Medicash sales and marketing director Paul Gambon. “If you’ve just got an insurance policy like any other, it’s just going to be used as an insurance policy, when there’s actually more value in an insurance policy than just what it does on the tin.

“There are the ancillary elements which can add value as the policy goes on because that is the bit that creates that kind of connection with the insurer and the individual. If something is being used more frequently rather than just when it comes to a claim or just when it comes to a renewal, then it’s far stickier as you think ‘actually I’ve had value for this’. They’ve had value over the year, not just at the point they need it for a claim. Now they have familiarity and loyalty to this brand that they will keep going forwards and will keep the policy with the insurer for longer.”

Head of accident & health at Collinson Group Marianne Stevens continued: “That’s right, and it depends on the product as well. When you are talking about expensive products such as health insurance where premiums are £4000 to £5000 a year, your customers are going to need that constant interaction.

“As the underwriter you want to be encouraging them to look after their health. If you think about people younger than me, everything they interact with like Instagram and social media, everything is very quick, and they are looking for that more and more. So, some of this is around the data we need to start capturing not just what typical insurance captures. What are those customers going to need when it comes to making their choices?”

“In motor insurance, you must have data to be able to price”, explained Adiona Insurance CEO Paul Harvey: “With 85% of the market on price comparison websites, you have got to have algorithms that can price you into the top two slots otherwise you are not going to get any customers. So, the question of not knowing any data is irrelevant.

“On the whole claims experience, you have got to have less severity and frequency, but the really tough thing is the long tail. It’s a battle. In the worst time of our customer’s lives, solving the problem as fast as you can but also having to deal, unfortunately, with opportunists in criminal fraud.

“But if we have the data on this, we should go back to the reinsurers and tell them we want better deals because we have data, we can show them.”

USP technologies

So could technologies such as telemetry and connected devices be used to collect data, engage with customers and give insurers a USP?

Robinson said: “I’ve been involved in telematics. Telematics took off at a certain time because the problem it was solving became relevant. That was the price of car insurance for younger drivers who couldn’t afford it otherwise. What you see there is suddenly there is a reason to engage. If you are giving incentives for better driving, actually engaging with the app scores actually quite high to the point where I see young drivers phone up to complain the bad driving was their parents not them. So, they really care.”

Hughes added: “That is where you can make contact because for a young driver or a taxi driver, the telematics information will tell you acceleration patterns, your braking patterns, climatically how you were driving, if it was a cold, wet day and you were going 70MPH on a motorway, that is of value. At the back of their mind they will be thinking when it comes to renew, that information could be used as part of the pricing model to determine my renewal price.

“We are also in danger of seeing insurance as an isolated product”, argued Jones. “But how can you join brands together so you can benefit from a broader proposition?

“If you look at connected homes where you can buy a package with various alarm systems, turn your lights on and off, how do you couple an insurance product with that so the consumer sees that as all one thing – an overall protection service rather than I’ve got my insurance product over here and I’ve got my nice whizzy wi-fi over there?“

Endava business development manager Ian Cassley interjected: “There is a business called TTC who have been building a driving scoring app based on weather conditions. If there are micro-payments back to your young driver on a monthly basis then suddenly that gets hugely interesting in the same way as a Garmin or Fitbit.”

So, with innovations and partnerships like these, are insurers now on the journey to building successful relationships with customers through using data?

Graham said: “Newer insurance businesses are going to build that engagement with consumers, and it is going to be a major problem for the incumbents who are unwilling to change. For me it is just a matter of time.”

Stevens added: “I think the change will start in lines such as health or others where you have a longer-term relationship with a customer where there is high value to build that brand stickiness and I hope it will filter through to other lines.”

“Provided you can add value and show purpose in the reason you are there and all the things you are doing for individuals, it’s only going to help build that engagement over time”, Gambon concluded.

“But I do think there is a lot of work to do. You only need to look at social media. How many people buy insurance and then go on social media to follow that company? It just doesn’t happen. We are still at an early point in the journey.” 

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