What's holding insurers back?
Insurers are looking for new ways to grow. Research from TechWeb provides answers.
In the recovering, low-growth economy, insurers are beginning to explore ways to use data, technology and tools to achieve profitable growth. According to a recent UBM TechWeb survey of Insurance & Technology readers, insurers are seeking new ways to retain existing customers and attract new ones. Yet many insurers report that their current efforts to gather customer insights and execute marketing campaigns are not as effective as they could be and that many challenges stand in the way of improving their results.
The survey reveals that insurers are looking to better manage customer data and predict customer behaviors and trends, and they are poised to look for technology to help them achieve their goals, primary among them the elusive "single view of the customer."
Finding that single view
Deborah Smallwood, founder of Strategy Meets Action, a Boston-based strategic advisory and research firm, notes that, based on her firm's studies, insurers lack clarity in understanding the possibilities and value of business intelligence. "Otherwise, they would be embracing, adopting and funding this critical technology at a faster pace," Smallwood says.
“There are pockets of successes as some insurers embrace business intelligence and advanced analytics tools for market segmentation, pricing precision and claims fraud. But on the flip side, many insurers are still heavily relying on spreadsheets and static reports to gain historical insights on customers, business operations and financials.” Smallwood adds that Excel spreadsheets can appear robust and flexible, and in some cases, they satisfy business needs. However, for operation and financial reporting, spreadsheets present a new set of data challenges because users manage and manipulate data at the desktop, with little to no control over data quality, consistency and integrity.
UBM TechWeb research confirms Smallwood's assertion. In fact, a full 53 percent of survey respondents are still using spreadsheets to facilitate effective interactions and channel coordination to support their customer strategies, and 57 percent are using spreadsheets to support customer marketing strategies. Fewer than half (46 percent) of respondents are using business intelligence tools to facilitate effective interactions and channel coordination to support customer strategies.
"Using more advanced tools to understand future events opens up the possibilities of valuable customer and market intelligence," says Smallwood. "Customer insights on trending, relationships and behaviors will bring clarity to insurers in their efforts to map customers to products to distribution channels. This type of intelligence creates insights that are critical to insurers looking to attract new customers and retain existing customers as well.”
Customer analytics are key
To accomplish those goals, insurance organizations are reviewing their customer intelligence (CI) strategies. Not surprisingly, more than a third (38 percent) of respondents reported that they seek to better manage customer data. Insurers are also looking to improve overall business or technology skills and capabilities, predict customer behaviors and trends, design and execute marketing campaigns and develop and optimize segment strategies.
“As insurers emerge from the recession and soft market, customer analytics is a key technology that enables these organizations to gain insight into their customer base to successfully grow their business,” says Stuart Rose, SAS Global Insurance Marketing Manager.
Obstacles and opportunities
And speaking of budget matters, UBM TechWeb research shows that just 11 percent reported that their organizations are seeing funding increases, while only about one in five (22 percent) insurers are experiencing continued budget cuts, and two-thirds (67 percent) reported no major funding changes. Despite the flat budgets, carriers are still planning to spend money on technology capabilities for developing deeper insight into customers and prospects.
About one-third of respondents (34 percent) plan to invest in data warehouse or master data management technologies, 33 percent plan to spend on business intelligence tools and just less than a third (31 percent) said they planned to invest in CRM. Nearly one in three (29 percent) will invest in customer analytics tools, 28 percent will spend on proprietary/in-house solutions and 24 percent will spend on Web-related technologies, online customer and Web insight, and social media analytics.
* Excerpted with permission from The State of Customer Intelligence in Insurance. TechWeb 2011.
This story appears in the Third Quarter 2011 issue of