Data insights drive growth in stagnant insurance sector

Source: Supplied. Schalk Fischer, insurance vertical sales leader at TransUnion South Africa.

It is clear that South African insurers are vying to retain customers and market share in a sector that is both highly competitive and increasingly
stagnant.

With the potential for interest rates to start easing consumer financial pressure by the end of the year, insurers should be looking to data-rich solutions as enablers for retaining and attaining the ‘good risk’ customers that will drive book profit. A sound retention strategy will not necessarily focus on keeping all existing customers.

Rather, it will hone in on understanding the factors that are impacting customers’ payment and claims behaviour, and then guide targeted, proactive interventions to nurse otherwise ‘good’ customers through periods of financial distress, in order to retain them.

Data is everywhere

There is data in every piece of the insurance value chain, from understanding your customer experience to developing products, to assessing your markets. There is so much data out there but, often, the real difficulty lies in using it to build a solution.

Before we can start looking at solutions, it is important to note that this data must be accessed and used responsibly. Insurers must ensure that their clients have consented to their credit data being used for this purpose, and that the data is being accessed and used in a legally compliant manner. This also extends to potential clients who have asked for quotes but not accepted them.

As far as solutions go, being able to overlay spatial information with a very detailed, aggregated level of financial data can enable insurers to derive segmented, hyper-personalised insights. It is possible to look at consumers in terms of age, income and financial health; then dive deeper to find those who own cars and property; and even deeper to include only those who are married and have children.

Following that, it is possible to find these people on a map, which gives insights into area-related risks like the potential for flooding or fire, and localised crime.

Action always beats reaction

Data enables timely actions. Being able to initiate conversations with the right customers, at the right time, before non-payment becomes a pattern or a customer wants to cancel, for example, gives insurers the upper hand, enabling them to make the right decision at that point in time.
If you use the data right, it is no longer a question of whether you can grow, it is about where you grow first. And how you plan and triage your investment to get the best growth.

The reality is that consumers interact with the world every day and make decisions every day. This means that data is dynamic and, if you miss the point at which a customer or potential customer is making a decision, chances are that you will have missed the point for some time. You have to have the data-driven insights to be at the right place, at the right time, with the right questions.