The Personalisation of Insurance


Personalisation requires more than inserting analogue applications into a digital space. To personalise effectively, companies need to use data to speed up and streamline the complicated process of buying and managing insurance. But how can data help simplify the process? It all comes down to relevancy. To be truly effective in an online space, insurers should consider the customer’s journey first and foremost. 

Why is it important for insurers to personalise digital experience? By using data, insurance businesses can understand what their customer really needs, in real-time and with accuracy. This allows a company to personalise the user experience, simplify and speed up the purchasing process, increase margins, engage with and retain consumers and understand what new features customers demand. With the customer at the forefront of digital transformation, insurers can be truly innovative. They have the ability to know what their customer demands, before the customer even knows themselves. 

To effectively deliver personalisation of insurance, we must understand what consumers are used to. When it comes to digital experiences, they’re already accustomed to personalised adverts and recommendations for retail or touch and face ID that respond to them personally. This kind of personalisation is expected when buying insurance, too.

Technology and scaling in cloud computing allow insurers to collect information from a combination of data to create experiences which are tailored to each user. Personalisation in this sense is quick and easy for the end user. While data is available to create applications, such as chatbots, Artificial Intelligence allows them to be constantly updated and improved by collecting the geographic and social data for personalised interactions. It is this continual improvement which allows personalisation to be ever more precise and speed up the process of buying insurance. Essentially, it removes the number of hoops customers have to jump through at all stages of buying insurance and making claims. This is crucial as people don’t have time to trawl through insurance policies and will inevitably buy from the companies that do offer instant, personalised assistance 

Another major opportunity for AI in insurance is generating faster, customised claims settlement. Online interfaces and virtual claims handlers make settling and paying claims more efficient following an incident, while also decreasing the risk of fraud at the same time. Another notable personalisation feature which is becoming more apparent in the industry is the ability for customers to select whose premiums will be used to pay their claims with peer-to-peer insurance. P2P insurance enables users to set up a pool of low risk members, resulting in lower premiums for all parties. Knowing the members of your pool facilitates more transparent transactions but also discourages members from launching fraudulent claims. After all, a customer would only be harming friends or family in their pool by scamming their insurer.

IoT adds efficiency and accuracy to pricing platforms. It benefits customers in a number of ways, not only in terms of reducing time spent finding the lowest price, but it customises products for each individual. For example, safer drivers will be able to pay less for auto insurance or people with healthier lifestyles could pay less for health insurance. Much like data science has disrupted finance, IoT is disrupting insurance. It moves analysis from proxy to source data. Insurance providers used to rely on risk pools constructed by statistical sampling, but now IoT sensors allow them to price coverage based on real events, in real time, using data directly linked to individuals rather than to groups. In every sector we are moving from proxy data, which is all about categories, to source data, which is about individuals.

To succeed in the next decade’s markets, insurance companies must rapidly move from products based on likely behaviour of groups, to those based on the actual behaviour of each unique customer. While this is how customers will experience the buying of insurance in the next few years, they expect and demand it now. After all, customers will purchase from the most efficient insurer who also offers the best value.