I’ve been asked if the digital revolution marks the end of the broker. Why do you need an intermediary when everyone can go direct?
True, digital has had a huge effect on insurance distribution. When I started out in insurance we met customers face to face. We had brilliant relationships, we got to know whole families and we knew how to incentivise them. But in a way it was wasted, because we weren’t collecting any data at a central level.
Today we do. And for that reason, digital channels are brilliant. All the information we would have gleaned on the customer’s doorstep is now stored centrally, so it is more accessible and consistent. In the digital world there are no secrets. Data is so prolific these days; there’s so much out there. But instead of asking how much we can get, let’s ask what we’re going to use it for. How does it benefit the customer? What’s the problem you’re trying to solve?
Using data well
Data can be used all across the business – for marketing, risk validation and fraud prevention. The more insight we have, the more we can help our customers, whether that’s by offering cheaper prices, better personalisation or a frictionless journey.
At BGL we look at data initiatives from three angles:
• Cost – how can we improve internal processes to strip out cost?
• Customer – what can we do to improve the journey?
• Capacity – what can we do for our insurance partners to provide more clarity about the risk?
This isn’t the end for brokers. In fact, we have a unique view of the whole market. We can gain more customer behavioural data than insurers and use this to help to provide a more personalised and relevant service. Digital drives data, and data drives value.
Data isn’t a number, it is part of a person
It is also worth outlining that digital doesn’t mean impersonal. Just because we don’t see the customer and look them in the eyes, that doesn’t mean we can’t offer personal service. In fact, it means we can get more personal, which is particularly important when every risk has a unique price. We use the data to make sure we understand the risks in sufficient detail to get the right price for every customer.
We are living in the midst of a digital revolution, underpinned by data. And for organisations to benefit from new technologies and innovations, they also need to understand what the customer attitude is to data and how will they respond to it.
There is no such thing as a typical customer. We are all different, and all demanding more personalised solutions and services. Data can give this.
Using customer friendly language is imperative
The language we use is hugely important. Nobody gets up in the morning and thinks: “I’m a customer”. And talk to anyone about data and they will naturally be cautious. Insurance, is not the most trusted industry in the eyes of the public.
We need to get over this hurdle. It’s about moving people from an emotional to a logical state, so they can see a better world where they’re in control of their data, and they benefit from the way it’s used.
This means we have to work hard on trust and transparency, moving customers to a place where they trust us as reliable and responsible custodians and users of their data. We also need to demonstrate the value they’ll get in return for sharing data. And it can’t be a promise of tomorrow – it has to be immediately.
You can’t have missed the PR from Lemonade, a US-based insurer, recently. A customer made a home claim and registered it online, Lemonade’s systems analysed it, they worked out it was a legitimate customer, they ran it through their fraud algorithms, it wasn’t fraud. They ran it through the policy algorithms, they decided it was a legitimate claim. They worked out the value of the claim, they transferred the money to the customer’s account, they sent confirmation that the claim was paid, and they closed the claim. And they did that in three seconds. I’m not saying we can deal with every claim in three seconds, but what an aspiration – to think about how we can use data to improve the life of the customer.
If we can do anything that helps build trust, and makes the lives of our customers easier, we’ll all be able to have long, enduring and profitable relationships with them. And, as brokers, we have a better opportunity than some.