Smart Policy Management

Big Data as a key to success

Policy management is seen by agents and insurers in the casualty and property segment as a burdensome, but necessary evil. But this is where the fight for customer loyalty can be won by using modern technology.

Life and health insurance are naturally attractive for agents due to the high acquisition commissions. Classic products such as liability or household insurance were gladly "included" in the past, but are less noticeable financially due to the low margins and portfolio commissions. This rather low level of interest is also reflected in the companies themselves. The product features and rates on the market are similar, and no insurer saw the casualty and property segment as a key to distinguishing itself from the competition.

Customer contact in casualty and property is shifting

This is changing with the increased presence of online-only providers with their comparison portals. Good comparability of features and rates together with the opportunity to find the best rate, comparison portals have gained ground with consumers. This is particularly because the easy application and policy issuing procedure has proved to be ideal for digital processes especially in property, accident, liability, and auto insurance. Some of the agents or even product managers were not that unhappy that the presumably unattractive business is now taken care of by someone else.

However, they strategically overlooked the fact that customers have been trained, not least because of the experience in classic commerce ("Amazonation"), to find the cheapest offers on their own and trust a comparison portal more than contacting an insurer directly. In this way, insurers lose contact with customers.

The unwanted policy management

Policies and contracts of the insured in casualty and property have to be managed, of course. In this sense, policy management is just a supporting activity, because the direct creation of value from the contact with the customer took place already when the contract was concluded. For an agent, this means that managing this customer's portfolio is primarily work in a segment that did not bring much revenue anyway.

Companies and insurers can only afford this perspective for as long as new customer business is flourishing. However, the dynamics of portfolios have increased by the transformation in consumer behavior in all areas and the increased use of comparison portals. In casualty and property insurance, the customers' readiness to change companies is higher than in other insurance branches anyway. Contracts are usually not binding in the long-term. A typical example is auto insurance. Every fall, there is a real wave of changes promoted both by insurers and agents through advertising.

Access to customers is the currency in sales right now

Online purchasing, communication by messenger and smartphone, use of retailer apps – consumer behavior has changed dramatically. The times when the insureds waited for an agent or insurance company to contact them are long gone. Large companies such as Amazon are starting to steal the rankings online in classic search engine for products of all kinds. Today, a cheaper price on any product is just a proverbial finger tap away. The customers' readiness to change products and providers is correspondingly high. Here, the insurance industry is not alone.

This poses the question of customer retention. One means of increasing retention is regular and intensive contact with customers, active customer management, i.e. policy management, in the insurance industry jargon. Portfolio analysis and regular contact with customers offer the opportunity for cross-selling and upselling. However, it is difficult for the insurance industry at first glance to initiate this regular contact. Occasions for this need to be found, while ensuring compliance with data protection and antitrust law. This is where a casualty and property portfolio can play an important role. It provides data and information that could prove to be an invaluable source for active processing.

Active policy management means active data analyses

Today, there are technical solutions for intensifying communication with the customer and offering the customer more points of contact. With chatbots and messengers, the insurer is present on the device that plays an increasingly important role in customers' everyday life – the smartphone. Health, fitness, smart home or auto apps are additional touchpoints. This also includes applications that the insureds use to manage their contracts or to be reminded of notice periods.

At the same time, their use provides information. This is valuable data about customers, their habits, their preferences, which should be collected. By multiplying points of contact and data sources, huge data quantities (buzzword "Big Data") are created, which obviously poses challenges for the companies. More specifically, this concerns storage capacities and processing by IT. But there is an indirect impact, too, because the data volumes harbor potential for finding out more about the customers' conduct and upcoming plans through intelligent analysis systems. However, such big data analyses are not trivial. In addition, the use of systems for machine learning with intelligent algorithms is a competence that possibly requires the purchase of external resources.

It is well-known that "IT relics" are still in use in many companies for policy management. These are outdated systems that seemed too expensive to replace, because they were not associated with any direct added value. Thus, experts will be asked to combine the modern world of AI analyses and big data with the old systems.

Smart policy management is the reward for all the efforts. Smart, because it will be additionally fed with data from smart apps, smart devices, and smart contact channels. Smart, also because it is not just a database, but data and analyses that can lead to an improvement of the contact with customers and thus more customer loyalty. Ultimately, this will lead to more business.

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