The Importance of Customer Data in Product Innovation for Insurance

This particular press release on Indi One caught my eye, because I too work in an Insurance Company. Albeit, in a different geography and demographic. But the problems described here are still very real in any insurance industry.

The press release rightly talks about how lack of customer data is hindering the innovation of products. As a Techno Functional Consultant a lot of my efforts are spent daily on mining customer data, to identify and make sense of patterns. Past factual data is extremely important while predicting the future behavior of a customer.

Let me give you a simple easy to understand example: Person A and B both work in a bank. They both live in a neighborhood not two miles from the bank and they both own the same type of car. Person A however drives his car only to his bank and back – the same route every day. For all other purposes s/he prefers to take the bus. Person B on the other hand takes his/her car to go everywhere, often takes long trips. It is therefore very easy to understand that even though both share the same demographic, their usage of their cars are quite different. And therefore the insurance company insuring their cars will have to treat them differently. It is likely that the products and discounts offered to person A will differ from what is offered to person B. But just for a moment consider if the usage data was unavailable to the insurance company. How would it look then? Insurance company will have to make a guess and perhaps it will not go in person A’s favor. There’s no one-size-fits-all here.

This press release talks about the problem in the context of Indian market, where it is even more difficult to obtain such data because of lack of awareness among the people. Until the Insurance market matures and people are more flexible and accepting of the many benefits of having an insurance policy, it is going to be a lose-lose situation for the individual and the insurance company: potential higher premium for the customer and also high chance of inaccurate risk pricing and hence loss for the insurance company.

Here is the link again to the Press Release: http://fintelektinsurance.com/interview-r-m-vishakha-indiafirst-life/

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