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Leveraging customer data offers insurers the ability to better risk assess applicants and personalise offerings. The challenge lies in having the right data at the right time for the right customer

Thursday 1 April
Read time: 3 mins
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The world is on digital fast-forward – more data, more competition for customers, more opportunities for fraud.
For customers, this equates to high expectations across all sectors, including insurance. Customers expect a personal experience that is easy, prompt and meets their specific needs. For insurers, the more data made available, processed and analysed, the more they can understand their customers and predict their behaviour – whether it’s insuring a new car, or attempting a fraudulent claim.
Although at opposite ends of the spectrum, customer success and fraud are highly complementary, leveraging customer data offers insurers the ability to risk assess applicants better and personalise offerings. The challenge lies in having the right data at the right time for the right customer.
In a recent Guidewire Connections Reimagined webinar, we discussed how the increasingly detailed knowledge that the claims department has can also serve other parts of the business.

Beyond fraud: Getting data just right

Think of a bank or even a supermarket which has a view of customer data on an ongoing basis. This progressive data provides deep insight into a customer’s behaviour - what will appeal to them, what they are looking for, and what their risk profile looks like.
By contrast, an insurer will get snapshot information at underwriting, BUT from then onwards there is little or no contact with a customer, unless of course they make a claim, which is when carriers find out most about their customers – good and bad.
In the past, claims systems have only passed the minimum data to fraud teams, focusing on required data for a single specific purpose. The technical challenges of cleansing and preparing data more broadly often outweighed the benefits of sharing it. Today, those barriers have reduced significantly, opening up data sharing opportunities across teams. When combined with third party and industry data, and connected through advanced entity networks and link analysis, it is now possible not just to identify fraudsters more accurately, but also to better understand good customers.
For example, insurers can delineate the risk profiles of an applicant who shares an address with another customer. Although the two have the same address and possibly surname – their risk profiles could be wildly different. If one has never made a claim, insurers will want to factor that into competitive rates; if the other is behind on renewals and applies for a second policy, insurers will want to ensure that’s flagged. Insurers will no longer miss an opportunity with good customers because underwriting has not made the connection that a good fraud detection system does automatically.

So what does the future look like? You guessed it – more data

The question remains, how do insurers continue to connect data in a way which offers a competitive edge both in customer experience and fraud detection?
Imagine an insurer has the ability to track many of the things they take a gamble on today. Like it or not phones are now being used to track people and the Internet of Things is able to track objects like fridges and washing machines to detect problems that could cause insurance risk, which may otherwise go unnoticed.
The one thing that is keeping this information out of an insurer’s reach is people’s natural suspicion of how their personal data is being used and an insurer’s current inability to incentivise customers sufficiently to take it on. Why should I let an insurer track my movements or private life? No chance, if all that’s on offer is a 20% reduction in my premium! What would convince me, however, is when it significantly improves my life, helps keep me safe from harm or loss, and/or perhaps saves me money. So what might that look like?
Picture a time when you drive into the city one night in your brand new BMW and park to go for a meal. An insurer with telematics installed could alert you to the fact that there has been a high number of evening car thefts recently reported on that street and send you directions to the nearest secure car park. The distress and loss of personal possessions far outweighs any saving on premium and probably outweighs the cost of the entire premium! A genuine win-win scenario.
Or the fridge you recently bought has had a manufacturer recall notice for causing fires?
At the end of the day, insurers are looking to protect their customers whether it’s preventing car theft or foiling fraudsters; and the trick to doing both, lies in the data. 

About the author
Robert Harris is Insurance Fraud Global Product Manager at BAE Systems Applied Intelligence


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