Top 2012 Resolution for Insurance Industry: Leverage Customer Data and Analytics

December 29, 2011
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insurance industry analytics new year resolution 300x214 photo (business analytics)Although insurance co

insurance industry analytics new year resolution 300x214 photo (business analytics)Although insurance companies understand the importance of leveraging customer data and analytics to retain customers, maintain competitiveness and sustain growth, many seem to be playing catch-up on this front. Although more than 9 out of 10 major insurance companies recognize that future growth depends on providing customers with exceptional experiences, most insurers don’t see themselves as currently providing customers with differentiated products or support, according to a global survey of 119 major insurers conducted by Accenture.

According to the survey, insurers realize that they need to spend more money investing in analytics so they can better understand and anticipate the needs of their customers. That’s because having access to new sources of data, for instance from social media, as well as improvements in data consistency, allow for much richer insights and help insurers answer questions such as “how will my customer behave, what are his or her interests, and what will happen?”

The study reveals that more than three-fourths of respondents (79%) rate themselves as “average” or “among the weakest in the industry” in their abilities to provide their customers with multichannel access to their services, including via mobile devices. Meanwhile, more than two-thirds (70%) rated themselves as “average” or “weak” in their capacities to tailor products and services to customer needs. Nearly two-thirds of insurers (64%) gave themselves similar marks in their abilities to provide innovative products and services.

Most of the respondents also give themselves low ratings when it comes to their current use of customer data and analytics. For instance, only half (50%) say they currently use data about customer lifestyles to help analyze their needs and expectations. In addition, only 16% of insurers use external data such as information that’s shared in social media “to a great extent” to supplement customer information that’s available internally.

The good news for the insurers is that they appear to recognize these shortcomings and are poised to respond. More than two-thirds (68%) of insurers say they plan to increase spending on analytics capabilities over the next three years.

While mobile technology is nothing new to the insurance industry, it appears that few are taking advantage of the possibilities. But there are several steps that insurers – and other companies – can take to improve the customer experience through the use of analytics. This includes approaches that can be applied toward developing more robust mobile applications, which are gaining in popularity among customers as smartphone adoption continues to climb.

When it comes to using mobile analytics, insurance companies shouldn’t look to what what their competitors are doing. Rather, they should look to what banks, mobile operating system vendors and emerging start-ups are doing in the mobile arena. And maybe insurers should think about partnering with other key players, such as a bank or online payment services, retailers, or telecommunication operators, to develop mobile initiatives that gain “wide adoption more quickly, offers greater functionality, and open doors to large numbers of new customers.”

Insurers can gather and act on insights about the ways in which customers use mobile devices to access information about insurance products. Insurers can then customize mobile applications to meet customer needs and preferences. This includes designing mobile applications that are easy to use, require limited key strokes and contain the key information that customers want.

Analytics can also be used by insurers to gather and act on a broader range of information about customers that can be used to create tailored, personalized products and support based on their needs, preferences, and ages. This includes the use of unstructured data that’s shared in social channels regarding the likes and dislikes of insurance products or policies as well as recorded information that’s shared in contact center interactions with customer support agents.

The bottom line: insurers are at a competitive disadvantage if they’re not leveraging their data to give their customers what they want.