Establishing higher and clearer standards of consumer protection across financial services, the UK’s Consumer Duty means insurers must ensure they are not only positioned to understand retail customers and their needs, but can also service those needs at the right time and through the right channels.
We see three clear broad areas of opportunity where insurers can bring greater focus and investment to bear to enhance their offerings to UK consumers:
- Digitalization and technology innovation
- Products, capabilities and channels
- Modern data architectures and analytics.
Modern data capabilities in particular allow insurers to know their customers better, clearing the way for enhanced personalization, and allow insurers to offer insights and data visualization that aid customers in making long-term decisions. By placing intelligent decision making at the heart of customer engagement and establishing ‘learning loops’, insurers can ensure customers’ evolving needs are continually recognized and served.
However, the maturity of digital policy servicing varies significantly across major UK insurance players. insurers, given their complex business models and highly regulated nature, have typically found it challenging to rapidly embrace digital innovation due to their heavy reliance on legacy systems.
Some insurers are working with tech partners to accelerate their digital journeys and capabilities. Aviva, for instance, is currently the most digitally mature provider in the market, offering its customers a broad spectrum of digital policy servicing option on its website and app (including the ability to renew, cancel or amend policies, and change payment details). Other providers have a more mixed level of digital policy servicing functionality, combining very sophisticated features, such as claims FNOL [First Notice of Loss], while still relying on old tech such as email in areas such as policy amendments.
However, there is no question that digital innovation is critical for insurance providers as customers rapidly embrace digital channels to access services and products. The traditional insurer model - which relied on customer inertia and limited customer access to pricing/quotes from other market participants - is being disrupted.
Insurance marketplaces such as Confused.com, MoneySuperMarket.com, and CompareTheMarket.com have already revolutionised the insurance shopping experience, offering insights and flexibility to customers while promoting competition and innovation within the sector. Insurtechs are now looking to revolutionise the way products are developed, marketed, and delivered, leverage advancements in digital, data, and analytics to enhance the customer experience through automation and personalization to reduce churn.
Consumers are used to shopping and making bookings via their mobile phones, and an increasing amount of policy servicing is done via dedicated insurance apps. In Capco’s 2023 survey of UK insurance customers’ habits and preferences, 63% of polled said they use a mobile device to access insurance products and services via a dedicated app.
The top three stated reasons for using apps are to update personal information, monitor a policy, and renew a policy. Contacting an agent, making new product purchases, paying premiums and making claims are also cited. Almost three-quarters (74%) of app users reported a positive experience, with convenience and/or accessibility being the quality policyholders most value in an app, followed by the range of services offered.
Key elements of value in the insurance sector
There is both an imperative and an opportunity for insurers to invest in data-led personalization to tailor the customer experience, enhancing customer engagement, trust and loyalty. This in turn will drive improved policy renewal rates, and increase lifetime customer value generated.
Now more than ever, insurance providers are beginning to understand the close interconnection between digital innovation, data, and customer value. Insurance companies prioritise data utilisation to deliver essential customer values, which include reducing risks and costs, ensuring stability, alleviating anxiety, enhancing product quality, demonstrating expertise in the customer or their business, and improving responsiveness.
Carriers that offer substantial support across key touchpoints - thorough risk assessment, ongoing risk management advice, and claims monitoring - can significantly boost customer satisfaction and loyalty. Moreover, the data gathered through these interactions can inform continuous improvement in the carrier's offerings, leading to a more customer-centric approach and better alignment with customer needs and expectations.
Our 2023 insurance survey highlights customers’ appetite to share additional personal data, with 81% of policyholders affirming they are willing to do so. This figure rises to 91% among young adults aged 18-34 years - who represent insurers’ core customer base over the coming three decades.
This additional personal data will allow insurers to build far more detailed and comprehensive customer datasets, from which advanced algorithms and machine learning techniques can be used to draw out the very precise insights and recommendations that are so vital to designing offerings tailored to ensure good customer outcomes by meeting an individual’s current and future needs.
By leveraging data from various sources such as claims history, market trends, and customer profiles, insurers can identify potential risks more accurately and develop tailored risk mitigation strategies. In addition to enabling insurers to offer competitive pricing options to their customers, insurers’ own financial losses can be mitigated.
Furthermore, data-driven insights enable insurance companies to provide stability and peace of mind to their policyholders. By analysing historical data patterns and anticipating potential risks or events that may impact policyholders' lives or businesses, insurers can proactively offer relevant coverage options that address specific needs. This proactive approach reduces anxiety for customers by providing them with comprehensive protection against unforeseen circumstances.
Another crucial aspect where data utilisation adds value is in ensuring product quality. Through continuous analysis of customer feedback and claims data, insurance companies can identify areas for improvement in their offerings. This enables them to refine existing products or develop new ones that better align with customer expectations and preferences.
Greater responsiveness is a further benefit. With efficient data management systems facilitating real-time access to accurate information, insurers can more quickly respond to enquiries or claims while maintaining high service standards. This responsiveness is another lever to foster trust and loyalty among customers.
The insights derived from advanced data capabilities provide further value to customers by connecting them to additional products and services. These will vary depending on the type of insurance and the specific provider, but might include wellness and health programmes, legal assistance, travel assistance, and specialised services tailored to specific industries or niches. Such value-added services are important differentiators in a competitive market, while helping ensure good outcomes for customers.
Capco supports insurers across property & casualty, life & retirement, reinsurance, employee benefits and distribution, applying our expertise in consulting, innovation & design, data & analytics, engineering and technology to transform capabilities and ensure good outcomes for customers. To find out more, please contact us below.