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Data is the new boss: an insurance imperative

EY Global

Ernst & Young Global Ltd.

6 minute read 08 Dec 2022

Insurers need to better understand their customers through the power of data and analytics.

In brief

  • Creating an optimum user experience will be paramount.
  • Building deep relationships by proactively altering the customer approach toward risk will be a game-changer for the industry.
  • A look at the emerging insurance trends that are changing the rules of the game.

According to industry estimates, India’s consumer digital economy may become a US$800 billion market in 2030, registering a ~10x growth from 2020.

The pandemic has powered a fresh wave of growth in the insurance industry. The digitally driven and tech-savvy customer has made the insurers revisit their propositions and adopt data-led strategies to stay relevant to the customer expectations.

Customers prefer information — crisp and transparent; interactions that are seamless and hassle-free.

Flexibility, convenience, and simplification drive this customer’s expectations of unique experience tailored to suit his preferences. For insurers, and the entire financial services industry, on the other hand, it is an interesting playing field with a plethora of customer information readily available on the internet. 

Insurers are working around their strategy and moving from bricks to clicks mode to offer this digital savvy customer a differentiated one-stop-shop, a convenient experience at a reasonable price. These increasingly common market developments point to a future where players instantaneously strategize their business models to respond to fundamental disruption by deploying competitive dynamics. This is where a much larger role of data and insights comes into the picture. Data can fundamentally redefine the industry through dynamic and tailored digital offerings that improve the customer experience. 

Insurers are gearing up to offer customers an omni-channel sales experience by leveling up to best utilize data and analytics coveted algorithms.

But this is not as simple as it sounds in the insurance space. due to multiple challenges existing across the value chain with customer onboarding, distribution and underwriting taking a lead. Besides, with limited consumer touchpoints, engagement is not something that consumers look forward to. In fact, many customers themselves have little or no access to their own risk profile and lack an understanding of their coverage appropriately suiting their needs. 

Digital surge backing data availability

Convenience has become the driving force in the insurance industry, closely followed by personalization. To achieve both, the insurance industry is demonstrating an increasing reliance on advanced data and analytics. The government’s push in enablement of Jan Dhan, Aadhar and Mobile (JAM) has made customers more comfortable in sharing their data with financial services providers than before.

How EY can help

  • Digital transformation in insurance

    We collaborate with insurers on technology transformation programs and the deployment of digital tools. From concept to implementation, we work with you to develop strategies that optimize performance, drive efficiency and enhance quality.

    Read more

  • Customer and growth solutions

    EY helps insurers adopt the right tech and retool experiences for stronger relationships with customers and distributors from crisis to recovery and growth.

    Read more

Insurance players face challenges of a rigid catalogue and lack proper understanding of their prospective customers and their needs. Data in the insurance industry stands to play a crucial role in resolving some of these easily to serve the evolving needs of the next gen consumers, who want seamless and hyper-personalized experience and refuse to settle for anything less. Amid all this, optimists would agree that it is an exciting time for the domestic insurance industry to carve itself to be relevant in the market.
 

Experts believe that for insurers, creating an optimum user experience will be paramount. Also, their ability to build deep relationships by proactively altering the customer approach toward risk will be a game-changer for the industry. They will need to work on regulating data, prompts and information in a frictionless way to enable consumers to better assess their overall financial situation.
 

Given the positive outlook of the regulatory environment to provide access to legit data and the emergence of account aggregators, National Health Stack, and the entire India Stack makes all this fairly feasible. This is further enabled through the regulatory framework, such as Ayushman Bharat Digital Mission NDHM, IIB etc., that have made data more assessable and accurate and may trigger the creation of a seamless ecosystem that well integrates insurance information.
 

Harnessing the power of data and analytics in the insurance industry
 

By adapting to the data-driven revolution, insurance incumbents must offer a differentiated customer experience that leans towards uberization. They could utilize the power of advanced analytics to provide customized, need-based solutions for specific segments.
 

Utilizing these, the insurers will be able to identify their target consumers and design products in line with their needs. It is imperative for insurance players to better understand their customers through data. Further, to cater to the needs of specific customer segments, such as rural, SME and GenZ, among multiple others, insurers must evaluate creating differentiated propositions.

Tie-ups with right data sources will enable data-driven automated decision making in the insurance industry

We have narrowed down a few imperatives for the key stakeholders of the industry — the policymakers and the insurers.  These will help them up their game by maximizing value and enhancing customer experience in this era of digital disruption. 

A few imperatives are listed below:

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    Summary

    The best way forward would be a coming together of  stakeholders to identify the right collaborative models, and to push for customer-driven innovations. These would involve utilizing the power of data-driven digital first ideas while holding respective niches and maintaining a continuous appetite of out-of-the-box ideas to drive engaging business strategies.

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