Data that Drives Dynamic Insurance Plans

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The Pay As You Live model offers users personalised insurance premiums and empowers insurers with multiple touchpoints to connect with their customer base.

What if your health insurance policy knew about your lifestyle choices or your motor policy was informed by your driving behaviours? Safe driving methods translate to lower premiums, while harsh driving is punished with steeper premium payments. Sounds fair? ICICI Lombard offers a Pay-As-You-Use policy that uses telematics installed in the car to measure your car’s health, information which then influences premium costs. Meanwhile, HDFC Ergo’s policy offers dynamic premiums based on usage measured in kilometres covered per year. Dubai-based Beema Insurance openly shames the one-size-fits-all cover and encourages customers to ‘trust the math’. Beema’s pay-per-kilometre plan sets the final price based on the user’s mileage; the less you drive, the more cashback on your initial premium at the end of the year. Beema is part of Next, an accelerator program of ENOC Group and their insurance policies are underwritten by AXA.

For medical insurance, the Pay-As-You-Live (PAYL) models extract value from user-generated data like fitness tracker apps that feed insurers with information about the user’s diet, physical activity and certain health parameters like BMI, blood pressure, blood sugar, etc. Germany-based Hannover Re has elevated its role from a financial cover to a health partner with its flexi-plan, which requires policyholders to download dacadoo, an app used for digital health engagement and health risk quantification. The app synchronises data to calculate a health score. Each premium is calculated based on this health score. The app also doubles as an engagement tool that motivates the insured to improve their lifestyle and incentivises users by using lower premiums as a reward.

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With this move, insurers don’t need to have a dull conversation with the customer about a rainy day fund. Instead, they now have information about the kind of activities the user prefers, diet, calorie intake, and faltering in their health plan and communication channel preferences. For marketers, data makes the difference in whether your message ends up in the spam or leads to a conversion. It also complements what consumers want. According to a recent study by Cognizant, the Middle East insurance market deals with three pressing demands from customers; fast and personalised products, transformation in the renewal process and a simplified claim process.  

The digital transformation in the insurance market promises to be a disruptive force that gives customers more flexibility and feeds insurers with the data they need to offer more customised products and services. According to a study by IDC and Liferay, 60 per cent of insurers say attracting and retaining customers are their top priorities.

Providing a personalised experience to new digital customers is a must for any insurer to build loyalty and long-term relationships. Insurers are increasingly looking at technology to drive this growth strategy based on customer-centricity.

Banking and insurance is the second-fastest growing industry in terms of IT spending. Among IT spending in the insurance sector, customer experience (CX) will have a 37 per cent market share by 2024, rising at a CAGR of 17.5 per cent to reach 50 billion USD. 

Traditionally, insurance was not very flexible. You buy a policy once, put your contract on file, and the premium is debited regularly. If things go well and you don’t have any claim, you’ll never hear from your insurer again. There are not many touchpoints between policyholders and insurers. This is changing. The digital transformation in insurance is moving towards deploying new technologies such as AI, the Internet of Things (IoT), drones, and blockchain to generate more value in the market. Top players in the Middle East like Adnic, Bupa Arabia, Tawuniya, Wafa Assurance, Abu Dhabi National Insurance focus on modernising legacy core systems and updating cloud management. Technologies are innovating across the value chain using cases that cut across affecting underwriting, customer engagements, and activities from policy sign-up to claims processing. 

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There are obvious advantages to cutting operational costs and taking smarter calls on risks using user data. Insurance companies can focus their transformation in three areas to lift customer experience; product development, claims-customer service and marketing. Product teams can learn a lot from customer analysis and predictive analytics to build flexible offerings that use customer data to personalise. Claims and customer service teams can benefit from creating digital customer portals, chatbots available 24*7, feedback management forms and e-claims services that automate document verification, thereby reducing turnaround time. Marketing teams must integrate customer relationship management systems to incorporate user data. Mobile applications for agents will help ease the customer through the journey. A fully-loaded eCommerce website for information and purchase to transfer the process online without the need for additional human resources and SEO and SEM to nurture leads.  

For the insurance marketer, any additional knowledge about the customer, any additional touchpoint can lead to a cross-selling opportunity. Combined with programmatic buying technologies, this can offer insurers a clear view of where the consumer stands in their buyer’s journey. This better understanding of each individual consumer helps marketers offer those individuals what they are truly searching for at the appropriate time. It’s a win-win situation. Insurers cut costs by focusing on consumers seeking insurance, and customers have a better experience because they get personalised products built for them.