Price guarantees, the ‘we won’t be beaten on price and cash rewards’ attitude are some of the standard marketing practices in the UK insurance market, putting the focus solely on price and pricing.
This has forged a disconnect between what consumers want and what insurers and brokers are providing, coupled with a lack of transparency around how premiums are calculated, this discrepancy also generated an atmosphere of mistrust between the insured and insurers.
Then came the pandemic
Covid made insurance companies and brokers face a flash flood of changes in consumer behavior and habits. With consumers increasing their use of digital channels, existing pricing models, data sets and processes proved to be outdated. Companies began to look for a fast way to provide fully digital offerings, backed by an agile, shockproof pricing and rating system.
Apart from the digital touchpoints though, consumers still wanted (and keep looking for) a quick and transparent service fit to their specific needs – and not a one-size-fits-all approach of a typical annual motor policy that gives them 6,000 miles a year and a European cover add-on which they will not use for a while.
The average UK consumer now wants something more personalized, which they have become accustomed to in their everyday lives. They expect interaction-based suggestions and offers, delivered via apps. They want to take care of their insurance needs the same way they do their food shopping, book their holidays, and so much more.
As a tradeoff, thanks to the same retailers and other online services, consumers have gotten more used to sharing their data in exchange for a personalized offering. The era of vouchers and high street discounts is over – customers want fair prices and not gifts.
From branch to advanced data management
With the increased use of digital channels comes additional data. An exponential increase in data, in fact. How we use this additional data to build new services for consumers is changing the way insurance works. In this new kind of digital consumer base, IT and technology are no longer a support service but the focus behind the operational change.
But how will brokers through to insurers ensure that they will not only be able to collect all the data – but that they will be able to manage it, organize it – leverage it? The inability to make sense of the data, see patterns and build business-critical strategies based on it (beyond just prices) is a serious pain point for many companies.
Telematics and basic PAYG based on mileage are in the market but the additional data gathered isn’t utilized to provide a truly personalized product offering.
In 2021 insurers have one mission-critical goal: to build up a system, that goes beyond the façade of a well-designed website. They need to put the machine behind it – an advanced analytical system empowering them to use every bit of data they collect for more customer-centric pricing practices, long-time value calculation, and more. Ensuring mutual, strategic growth.
The beginning of a beautiful friendship
The market is transitioning out of the shock of 2020, heading towards a thorough transformation. Meanwhile, upcoming regulatory changes will for sure affect how new business and renewal premiums are calculated.
Covid has not been the last cataclysmic hit. When insurance brokers and MGA’s envision their digital transformation process – real-time agility, personalization, and advanced data management must be front and center.
It’s the beginning of a new era, where the survival of the fittest will depend on the ability to operationalize and deploy real-time insights and data-driven decision-making, powered by analytical pricing software capable of real-time pricing, price optimization, and product personalization – for an ultimate win-win. Both for the Insurance broker and the insured.