Analytics report outlines shift to consumer-driven practices

THERE’S MORE to being ‘customer-centric’ than simply parroting clichés such as ‘we put the customer first’ or ‘the customer is always right.’ And although insurance leaders are aware of this, the shift from product-driven to customer- driven practices does not come easily.
That’s according to top Canadian insurance executives canvassed by FC Business Intelligence for a new paper titled ‘Analytics for Insurance in Canada: Customer Centricity Report.’
The London, U.K.-based consultancy’s report is a sequel to its recent ‘Strategy and Implementation Report’ (Thompson’s, Feb. 1), released in preparation for the Insurance Analytics conference and exhibition to be held May 12-13 in Toronto.
It said many insurance companies have thrived for more than a century by focusing on their product offerings rather than end consumers, making it hard for some to change direction — and prompting others to ask why they should.
But it is necessary simply because customer expectations have changed, The Co-operators’ business intelligence vp Carl Lambert said.
“Many other industries have taken steps to focus on the customer and so (customers) expect to be treated well.
“They expect to control the ways they interact with companies and insurers have been one of the last sectors to make this change.”
Dennis Nilsson, RSA Insurance vp and leader of its centre of excellence for pricing and underwriting, said: “I would love to say that we are 100% customer-centric but I think it’s fairer to say that we are moving that way.”
Mr. Lambert said The Co-operators’ $100m-plus payout due to the 2013 Calgary flood underlined the benefits of a customer-first strategy.
“Flood is not a risk that is usually covered in the Canadian insurance sector and at the time our ceo’s message was that we should be proud of paying out that money because it was a time when we had accomplished our mission as a company.”
Mr. Nilsson told FC Business Intelligence that RSA had been developing new products by “just asking ourselves what we think the customer needs.
“The obvious drawback is that you have this myopic vision through a product lens and it creates silos that compete internally for customers and lack a co-ordinated approach,” he said.
“The future for companies is to balance the product view with customer focus so they feed directly into the decisions you’re making.”
And he said it was more important to move quickly toward changing the corporate mindset than to sew up every detail of the end product.
“Most often, the time needed to achieve 100% of the solution is not worth it compared to the timeline to achieve 90% of the solution.”
Interviewed executives also agreed with findings from an FC Business Intelligence survey that found the biggest impact of incorporating data and analytics into the organization would take place in underwriting (26%), followed by marketing (13%), pricing (10%) and actuarial (10%).
Asked which service provider would be crucial to delivering the future of Canadian insurance, most executives did not cite Google or Apple, but Opta and to a slightly lesser extent, IBM.
In particular Opta — an SCM company that bills itself as the largest aggregator of structured risk information and property data in Canada — was seen as showing product development expertise based on customer insight rather than historical insurance product development knowledge.
Of survey respondents, 36% claimed that they were starting to see a return on investment from customer analytics, 20% had not seen a return so far and 10% had resigned themselves to no returns for another two years.
“Either the service companies are going to have to start offering insurance, or the insurers are going to have to start providing services,” said Mr. Lambert of The Co-operators.
The new FC Business Intelligence report can be downloaded from the following link: