Life insurance poll results signal changing attitudes
Bravura Solutions recently conducted a poll of the life insurance industry in conjunction with the Financial Services Council (FSC). We were seeking to gain a perspective on what impact technology had on life insurers’ ability to engage with and know their customers, and their status in terms of the modernity of their administration systems. Some of the results we received confirmed our own experience and anecdotal evidence, although we found some of the results a little more interesting.
We asked “As pressure in the life insurance industry to drive down costs and increase profitability continues, where is your organisation in its journey to modernise its administration systems?”. To this, 14 percent said they had already done it, 26.8 percent had plans to do so in the next 12 months, 35.5 percent stated that they had plans to do so in the next five years and 23.7 percent said they had no plans at all. Systems modernisation appears to be well and truly on the radar of life insurers, with 76.3 percent either having already modernised, or planning to do so in the next five years.
Interestingly though, when we asked “How well does your organisation know your customers?”, 29.9 percent said they made full use of big data and analysis to anticipate customers’ needs and create bespoke solutions. Based on our interaction with customers and associates in the industry full use of big data and the resultant ability to automate, predict and streamline are still largely not being realised, and certainly not to the tune of nearly 30 percent.
The vast majority of respondents (67 percent) said they only had limited access to customer data, enabling some personalisation but insufficient analytic ability to predict behaviour. This falls in line with our experience of the inner workings of many life insurance organisations. While many have access to large pools of data, few have the systems to facilitate a deeply personal and engaging experience for customers. This statistic correlates strongly with the results to the question “Which of the following elements has the biggest impact on your customer engagement model?”. 56.7 percent answered “targeted and tailored communications to customers”. Big data is being used to an extent to create more targeted marketing and communications campaigns, but this is only the first stage in a market leading engagement model.
Most Life Companies have invested heavily in data warehouses and some forms of big data analytics, however, we feel that the majority still have a fair way to go before reaching full potential with big data. The next steps for the industry is leveraging big data and combining it with modern technology systems. Moving to the “next level” will create enhanced experiences around acquisition of business (targeted offers, direct marketing, lead management), as well as more streamlined processes, risk management and enhanced underwriting and claims management. Building in behavioural processes and personalisation to improve customer experience and encourage retention and up-sell/cross-sell of products and services.
We are seeing an interesting shift in attitudes to technology in life insurance companies. The question no longer seems to be “should I modernise my systems?” – the majority either have started or plan to. The question today is “how do I leverage my data to create better experiences, enhance efficiency and know my customer?” – this is a significant step forward.
While there is still a distance to travel before life insurance systems are “untangled” and the full potential of data and technology are reached, there are companies actively making moves to create a more sustainable back office environment to set them up for success.
As pressure in the life insurance industry to drive down costs and increase profitability continues, where is your organisation in its journey to modernise its administration systems?
Which of the following elements has the biggest impact on your customer engagement model?
How well does your organisation know your customers?