New Year, New Tools to Service Insurance Customers

Jan 1st, 2013 | Posted by
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For those interested in how new data techniques and availability are changing business models, I can recommend the article Smarter Information, Smarter Consumers in the latest edition of Harvard Business Review. http://hbr.org/2013/01/smarter-information-smarter-consumers/ar/1

The central premise is that legislation in the U.S. and U.K. now requires government agencies to make public data available and consumable in electronic form. This enables new techniques that leverage this information and provides increased value by making the purchasing process more intelligent. The authors offer their concept of “Choice Engines” – on line tools that guide consumers to make better purchasing decisions more efficiently using public information. At some point in the future, they also predict that private data will be added to the mix and allow the engines to work at a personal, individual level.

Most of the use cases are consumer product-oriented, but as this blog has described previously, customer service expectations in other industries will influence insurance purchasing. The person who benefits because their cell phone company suggests ways to lower her bill (the authors’ example) will also want the same service from her insurance agent/company. Consumers and businesses will expect to be contacted by their agent/insurer when their risk profile changes. For example, if an addition is added to a house, insureds will expect that their insurance will be monitoring building permits and will want to be contacted proactively so their insurance can be adjusted appropriately.

Two questions specifically related to insurance deal with timing and distribution models. Which insurance company will be the first to employ a choice engine for its insureds and prospects? Can an insurer with a mediocre data infrastructure and skill base compete with those which invest early and heavily in data techniques? Will independent agents embrace choice engines as an enabler, or reject them as a threat to their value proposition? Would an insurer be willing to offer such a tool to a distribution force that they don’t control?

There is no question that managing risk will move from a point-in-time (usually renewal) event to a more continuous process. What is to be seen is which company changes the insurance purchasing model and transforms the buying process by using a tool like a choice engine.

  1. Jen Overhulse
    Jan 7th, 2013 at 22:43
    Reply | Quote | #1

    Mike, some great points here that we have recently seen illustrated in the gun control debate. Publication of gun owners’ names and addresses in New York anyone? That said, and to your point about the possible addition of private data in the future, I think you are right there as well. Private data will continue to be added to the mix, and most of it will be done willingly. Gen X, Gen Y and Millenials will forfeit certain rights to bits of privacy willingly in order to gain benefits such as price breaks/discounts, or status within social networks. For agents, especially those dealing mainly with personal lines insurance, change is coming, so they might as well buy in now. There is a Chinese proverb/curse, “May you live in interesting times.” I think it’s safe to say we certainly do.