OPINION How the single customer view can make insurance marketing more effective

By James Burton, senior director of Insurance product management, LexisNexis Risk Solutions UK&I.

Customer data management (CDM) has not been without its challenges in the general insurance market – switching, the number of policies over a lifetime and the life events that drive these changes, to name a few.  But the elusive ‘single customer view’ is now within reach thanks to new technology.

The CDM conundrum in general insurance can be attributed to a number of factors.

First, consider the volume of policy switching in personal lines. LexisNexis Risk Solutions analysis of the UK market has identified that on average over the past 5 years, close to a third (32%) of people switched their motor insurance[i].

Add high levels of merger and acquisition activity[ii], the on-going challenge of legacy systems and the fact that data is often stored in disparate customer databases across an insurance brand.

The result can be that consumer data becomes outdated, incorrect and inconsistent. It then becomes quite feasible for the same customer to appear multiple times across a single or separate database within one insurance group with no link being made between records. They could appear with different names or addresses due to input errors, a home move or change in marital status, making linking, matching and de-duplicating an even bigger hurdle.

This can hinder the marketer’s efforts to accurately segment customer databases, leading to wasted marketing budgets as well as lost cross-sell and upsell opportunities. That is aside from the risk of fraud, impact on pricing accuracy and poor experience this creates for the customer.

All at a time when the market is highly conscious of changing expectations and risks created by the pandemic and on the cusp of new pricing regulations^[iii], which will almost certainly impact customer acquisition and retention strategies. Insurance providers will want to be sure that the products and services marketed and sold to their customers are appropriate and suited to their demands and needs.

Another factor to consider is that insurance providers have not traditionally had many opportunities to interact with the customer during the policy term. According to research by Consumer Intelligence[iv], home and car insurance providers only interact with consumers once or twice a year.

This makes it difficult to build a relationship with them, create a picture of their needs and influence their decision to stay at renewal. Decisions to stay or go may then be purely based on price because that appears to be the main differentiator.

While engagement opportunities may change in the future as connectivity from cars and devices offer the potential for greater interaction during the lifetime of the policy, a study by Collinson Group^[v], suggests there is already a good opportunity for marketers to increase engagement. Consumers in the study^[vi] said they were generally receptive to more communication from their insurance provider, as long as it’s relevant and timely.

The single customer view solution

The answer to these challenges lies in creating a single customer view, giving insurance marketers a comprehensive and accurate representation of the customer, which can help determine that the right product is being marketed for the risk presented. Most importantly, that the marketing communications and tactics occur at the right points in the policy lifecycle.

The single customer view is achieved by pulling together data from multiple touch points using patented linking and clustering methods. Common threads are found between records to match up disparate data using a wide range of external data sets including public records and insurance policy history data gathered from across the market.

Records with commonalities are linked together and are then assigned the same unique identifier. This process can be done in batch form for all existing customer records and at the point of quote so that new customers are also assigned a unique identifier.

This means one ‘true’ or ‘golden’ record can be created for one customer offering a consolidated view of every contact or policy the insurance provider has had with that person.  This single customer view can then create the foundation for all future dealings with that customer.

By consolidating details about a policyholder, marketers are in a stronger position to communicate relevant and customised products and services. The picture of the individual and their risk can then be enhanced as more data is accumulated. Along with marketing, customer services, pricing, underwriting, portfolio management and claims departments can all benefit.

Through the single customer view, insurance marketers can look at customer data in a new light. For example, building on the customer view with vehicle centric data through data enrichment processes could enable them to see when a customer is about to change cars, or when their MOT is overdue, when a storm threatens their region and property, opening up communication opportunities. Customers identified as having multiple policies within the same group could be offered a packaged multi-product.

Linking and matching using LexID®, a unique identifier, can help all parts of the insurance market make sense and make use of the vast volumes of customer data held across their business to identify cross-sell and upsell opportunities to the right customer at the right time.

In a ResponseTap[vii] White Paper – The Joy of CX – with input from LexisNexis Risk Solutions, when people were asked why they chose not to buy insurance over the phone 49% said: “I don’t like having to repeat all my details again over the phone.”

This annoyance will resonate with many, but it is just one problem that can be solved through the single customer view. It comes down to knowing the customer better to communicate, market and ultimately serve them better.

[i] LexisNexis Risk Solutions analysis based on the processing of over 500 million policy transactions across 28 million active motor insurance policies over the last five years

[ii] https://www.clydeco.com/en/about/news/2020/02/global-insurance-ma-at-a-four-year-high

[iii] https://www.fca.org.uk/publications/policy-statements/ps21-11-general-insurance-pricing-practices-amendments

[iv] Which Insurance Companies Give The Best Customer Service? (consumerintelligence.com)

[v] https://www.collinsongroup.com/en/insights/uk-consumers-want-to-hear-from-their-insurance-providers-more-often

[vi] https://www.collinsongroup.com/en/insights/uk-consumers-want-to-hear-from-their-insurance-providers-more-often

[vii] https://responsetap.ember.cx/l/843183/2020-09-03/npg81