Building Loyalty in insurance ecosystems

Risk is Data

Insurance is, by definition, an industry built around risk. Insurance companies greatly depend on their ability to predict what risk this or that person, company, or organization represents. The more information they have about them and the more accurate this information is, the more likely they are to make a correct prediction, either saving themselves money or earning extra revenue.

The emergence of AI and Big Data technology means that insurance companies should scramble for the ways of implementing them in their work to get the much-needed edge over the competition. One of the most obvious examples of insurance industry technology that completely changes the way things are done are the IoT infrastrucrure, in the form of telematics, wearable or smart home/city sensors.

The insurance industry is experiencing digital transformation in a big way. The amount of funding given to insurtech companies has exploded over the past few years, from around $270 million in all of 2013, to over $1.7 billion in the first half of 2018 alone.

Challenges

Unfortunately although there are several digital transformation initiatives across the industry, challenged remain the same and can be grouped in three categories:

• Customer Retention: Is the main objective of every insurance company. The need for a sophisticated Customer Value (CV) model across all channels and products and customer leveled reward programs similar to airline loyalty. Campaign automation, VIP customer classification and insurance product related redemptions that strengthen the brand and sense of safety.

• Process Automation: A properly defined loyalty program can strengthen customer relations, through automated communication via chatbots, robs-advisors and apps. In addiction, it can cross-up sell to customer segments and at the same time educate them, which is probably the main objective towards proactive claim minimization.\\

• Claim Optimization: By utilising incentive-based educational games on product coverage the institution can optimise towards damage avoidance. In addition, claim self care can be carried through personalized actionable messages and incentivised offers.

Finally, insurance company’s own properties (repair shops, clinics) can be used to absorb claim budget and control claim costs.

InsurTechs as partners

InsurTech startups by definition have a mandate of challenging the status quo. In the case of insurance industry this is not as easy task to accomplish as launching a marketplace for an internet business. Regulation and underwriting rules that have been established over years of data crunching imply that mathematical models need to be accurate and transparent at the same time, not the best use case for a deep learning algorithm. In addition, insurtech various solutions build from a customer facing interface with frictionless onboarding towards modifying and personalizing the product pricing. Either this is telematics, health condition and medical data or home automation and surveillance the core insurance product pricing is not something large insurance institutions are eager to touch.

Fortunately there is a strategic solution to this riddle. A sophisticated loyalty program which rewards insured persons for specific actions that minimize claims. For instance drive defensively and get free car service, or perform yearly checkups and exercise often to get gym discounts.

Digital Ecosystem

In a platform ecosystem overview, loyalty together with customer value, and reward schemes serve as the turn key component of a successful omni-product digital strategy. Rewards and incentives is what will enable insurance institutions to quickly deliver and embed in their ecosystem all innovative third party solutions.

Warply Engage can provisione data from existing business intelligence systems that unify customer view, thus enabling the measurement of true customer value (CV) and sophisticated behavior profiles for all insured customers. By doing so, we can:

• integrate all vertical solutions from car, health and general insurance sectors in order to reward behavior with gift-cards and discounts provided by third party redemption partners.
• utilize Warply Engage partner exosystem in order to bring in exclusive offers and discounts fusing them with existing insurance related properties, such as clinics and car repair shops.
• add a selling point to your partner network or your aggregator contracts, alongside retailer, travel apps and other digital channels to sell microinsurance.

Finally, this strategic reward ecosystem perspective will drive intrapreneurship and cultivate an innovation culture within the organization. Image to be able to launch MVPs and test assumptions, without having to touch your underwriting process and workflows, but rather leverage on an existing value chain of relevant and personalized benefits.