Where insurers should be focusing their attention

2018 was a year that many insurers would want to forget. The economy was not where it should have been which resulted in a lot of unnecessary policy lapses. The fact that the personal finance of clients was constrained meant that the insurance industry took a knock because there was very little buying power in the industry. Additionally, we saw a lot of clients turn towards the media when they became dissatisfied with their insurers.

These were the words of Filipe Nunes, Head of Life at Munich RE, who opened proceedings at a recent Munich RE client function. 

Not everything was doom and gloom. He pointed out that there is some positivity in the market and insurers can capitalise on this if they set off on the right path. 

The big differentiator

Insurers are getting used to conducting business in an environment that is unlike any environment that has governed the industry in the past. It is an era of instant information, instant gratification and hyper personalisation. 

In order to overcome this, companies need to go back to basics and focus on a number of key elements which will ensure success. 

According to Laurence Beder – a Lecturer of Marketing and Entrepreneurship at the Wits Business School – Big Data will turn out to be an insurers’ trump card in this new environment. 

“Insurers have always dealt with data and customer relationship management systems. However, they were unable to get the data to work for them. Big Data is important because it allows insurers to get close to clients. And the closer that they get to clients, the more that they will see how they can create value for clients. Once they can create value for clients, they can manage these relationships profitably,” said Beder. 

Three wise elements

How do insurers manage Big Data more effectively? Beder believes that there are three key elements that will drive data refinement: 

• Client engagement. “It is key for insurers to understand customer insights. Insurers need to be collecting relevant information around who their clients are, how their clients behave, and how they can get closer to clients,” said Beder;
• Client retention and loyalty. “It costs five times as much to bring in a new client than what it is to service an existing client. The challenge for insurers, when it comes to client retention, is how insurers will get all of their distribution channels to be singing off the same hymn sheet when they talk on their behalf,” said Beder; and
• Issues of control. “The debate around who owns the client needs to be resolved. This is a big issue because in certain circumstances, advice is given to clients by brokers. Brokers and agents who feel that they own the client and have greater sway over them because they can influence the decisions that are made,” said Beder. 

Client centricity

Big Data refinement will influence client centricity. What does this mean for insurers? 

“What we are seeing is that there are companies who are better at client centricity than others. They apply the issue of developing the client experience better than others. They are doing business in such a way that they are looking at their client’s point of view before, during and after any form of engagement. This generates repeat business, client loyalty and profitability,” said Beder. 

He added that it is important to note that it is not only the insurer itself that needs to have good client service. The company needs to derive value out of the client experience that brings further potential value to the client. The client will notice this value and then purchase products that display this value. 

At the end of the day; Beder pointed out that insurers need to know their strengths and what works best for their company. “Often, there will be a debate about whether an insurer needs to bring out a new product or should they service existing clients more effectively. Insurers need to use client data to understand purchasing behaviours, customer insights, interests and engagements and how these elements will drive value,” said Beder. 

Editor’s Thoughts:
If Big Data is the new oil, refining it will be a key industry function. Is value derived from crude oil itself or its refinement into petrol and diesel? This is where the focus of the industry should be. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.