It is time for insurers to take personalization seriously.

In every industry, customer experience is becoming highlypersonalized, and many consumers will not even engage with a brandunless the message and offer is tailored to their needs andsituation. 

Insurers seeking to deliver personalized services need to have abetter grasp of customers' behaviors and actions, and use thisinsight to offer more frequent and higher-value interactions.

Accenture research indicates that 80 percent of insurancecustomers are looking for personalized offers, competitive pricingand recommendations from their auto, home or life insuranceproviders, and an additional 77 percent are willing to provideusage and behavior data in exchange for lower premiums, quickerclaims settlement or insurance coverage recommendations.

Digital and retail giants such as Google and Walmart are alreadyahead, collecting large quantities of consumer data viasmartphones, home hubs, shopping loyalty programs and othersources. By doing so, they have the intelligence to identify wherecustomers are located, how they manage their personal lives andpossessions i.e. their home and vehicle, and what life stage theyare at. In comparison, less than a quarter (22 percent) of insurershave launched personalized or real-time digital ormobile services to date.

It's clear that many insurers are failing to capitalize on theopportunity, opening up potential revenue to more forward-thinkingcompetitors and cross-industry players who are delivering levels ofpersonalization that many insurers would struggle to match. 

Adopting a new mentality

Today's insurers are hindered by the fact that the industry hastraditionally maintained a low frequency of interactions withcustomers. Product-oriented cultures, reliance on independentdistribution partners, complex organizational structures andoutdated technologies also provide challenges.

Insurers that strive to provide a superior customer experiencemust migrate from a transactional mentality to arelationship mentality. They need to think beyondinsurance related products and services, and the limited range ofinsurance process-related customer interactions like bills,payments, renewals and claims. Instead, they should look at thebigger issues, such as helping customers live the sort oflifestyles they want, prevent losses, or to take the necessarysteps to improve their financial well-being. By doing so, they willchange customer perception and drive growth in new product andservice categories.

Capitalizing on customer personalization

To take advantage of the opportunities that greaterpersonalization enables, insurers need to start by formulating andimplementing an actionable customer strategy. Advanced analyticscapabilities will enable insurers to create precise and actionablecustomer microsegments and propensity models based on demographics,life stage, needs and behavior. From this, insurers can identifysegment-specific opportunities to personalize offers, messaging,pricing and recommendations to individual customers across physicallocations, web, mobile, and call center channels.

Insurers will need to ensure that their marketing processes,tools, organizations, and agency relationships can cost effectivelyscale up to enable greater content and message variations necessaryto deliver more personalized, omni-channel experiences.

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Insurers can also benefit from developing a test-and-learncapability that can operate at speed. Once success is achieved on asmall scale, they will need a customer-centric operating model torapidly integrate the learnings across channels and lines ofbusiness, where appropriate.  

Leading insurers are starting to take this approach to deliverincreased levels of personalization. One major insurance provider,for example, is working to combine profiles of customers' past andcurrent transactions, and content from social channels, to create apersonalized experience on its mobile app. Another insurer isdeveloping customer microsegments to help improve the returns oncustomer retention and cross-sell campaigns and offers.

The power of leveraging larger quantities of data

As the number of Internet of Things (IoT)-enabled sensors anddevices explodes, insurers will have the opportunity to leverageeven more data on a much bigger scale from these devices to bettermeet customer needs, in particular, around loss prevention andprotection, pricing and coverage optimization, and value-addedservices. For example, by monitoring for water leakage, insurerscan alert customers to a problem and enable them to act morepromptly to prevent or at least minimize damages in a home orbusiness. As a value-added service, the insurer could even call aplumber on the customer's behalf to get quotes. Customers who optinto this service could receive a discount on their homeownerinsurance.

Some leading insurers are already moving in this direction now.Research suggests that 16percent are already working with startups and external partners todrive digital innovation, while another 17 percent are partneringwith non-insurance companies to offer customers a broader range ofrelevant products and services.

For instance, Direct Assurance has begun offering You Drive,which collects information fromsubscribers' automobiles and provides them with personalizeddaily driving advice via social media, as well as monthly scoresthat impact the cost of individual premiums. And Vitality, a globalwellness company and loyalty-based program, is working with a number ofinsurers including John Hancock, Generali and Ping An, toprovide proactive fitness and well-being coaching, and to rewardpolicyholders with insurance discounts for healthy lifestyles basedon data collected from wearables and other technology.

Delivering on customer needs

Insurers that truly know their customers, maintain a continuouslevel of interaction and build customer trust will be better placedto capitalize on the opportunities of delivering higher levels ofcustomer personalization. They will also provide a stronger valueproposition to their customers — one that includes notjust indemnification, but constant protection. Doing so will helpinsurers maintain a competitive edge in fierce, growing and diversemarket.

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