Tailored Insurance Products
Modern insurance companies are using tech processes to offer personalized insurance packages - but what exactly is this about, and how do they use it? In this article, we'll take a look at what personalized products are and how insurance companies are using them to create more customized coverage for their customers.
People want a custom solution
When it comes to insurance, there is no one-size-fits-all solution. Just as every person is unique, so they are their insurance needs. That's why insurance companies that offer more customizable products will have a competitive advantage in the current market.
Personalization is undoubtedly one of the main expectations to be covered today, users value insurance that speaks to them. Through individualized communications, it’s possible to anticipate their needs through relevant recommendations (among others), and recognize them in the different channels (store, website, app, etc.). In addition, personalization is the spearhead of the creation of user experiences (CX), one of the most relevant topics in current marketing.
However, product customization in the industry is not trivial. It requires the assessment of experts to know the policy viability and profitability. In addition, customization can be almost infinite, giving rise to complex and not fully tailored products.
Working with traditional companies, you can adapt but not fit insurance that meets your specific needs and budget. This makes personalization, one of the biggest challenges in the industry presented here. Those insurance companies that know how to adapt to the specific needs of the client, will be able to offer coverage and more competitive prices
People want to feel safe
Technology has advanced to the point where insurance companies can now offer personalized insurance packages to their customers. This is made possible by the use of data analytics, which allows insurers to better understand the risks that their customers face. Besides, some clients want to be understood without asking for it. We call this anticipation, very common among consumers of Generation Z or Millennials
This is good news for consumers, as it means that they can now get insurance coverage that is tailored specifically for them. No longer do they have to worry about being over- or under-insured, as they can get precisely the right amount of coverage for their needs.
Of course, this new technology comes with a few caveats. For one, it is still relatively new, which means that not all insurers have adopted it yet. On the other hand, there is still a long way to go. The customizations just aren't specific enough in many cases. The technology used by many insurance companies is completely outdated to deal with this complexity and some insurance companies have not yet understood the value that this represents.
The moment a person feels that someone offers them the security that goes beyond standard coverages, that they really understand their fears, at that moment the customer will bet blindly on that insurance company.
People want 360º coverage
Insurance products are too segmented. That requires knowledge on the part of the consumer that sometimes generates mistrust. Other times, that segmentation and little customization make the total set of coverages little sense, even making them duplicated.
People want to feel secure but also want to escape the current complexity of many insurance coverages. In an increasingly technology-driven society, communications across old channels are losing value. A user needs to understand, consult and contract specific coverage for specific times. Without having to rely on outdated channels like phone calls.
The new generations want to have control over the contracted products. Being able to activate and deactivate coverages when they think they need them (even if this means paying an extra fee).
Clearly, the fact of customizing a specific coverage level, for a certain moment, is something that is going to make us think of many coverages that had not been contemplated before, giving rise to complex product configurations that are very different from those that are now offered.
A new era open to cooperation
For all those reasons, cooperation with third parties is needed to offer a 360 customer experience. The insurance industry is no exception and is starting to explore ways to cooperate with other services. The synergies between industries are a reality that ends up benefiting the customer.
Some examples of this cooperation are open APIs like Vericred’s Ideon API. It allows you to search for Health Plans that a specific doctor accepts. This includes medical plans, dental plans, vision plans, coverage, drugs, networks, and providers.
Nationwide Building Society ****is a British mutual financial institution, the seventh largest cooperative financial institution, and the largest building society in the world with over 16 million members. Nationwide offers a set of API Products from Automotive, to Pet Care, Retail, Business Services, Insurtechs and Fintechs, and much more.
Just a few examples of the importance of cooperation today. To facilitate this cooperation, insurance companies must be less hermetic, more technological, and be ready to adapt to the changing reality.
How to create tailored products
Some properties of insurance products are not necessarily subject to change. These are properties that have an impact on the final cost of the product and that are inherent to the product.
Parameters such as birthdate or the covered object will never change, they are what we call the core properties of the product, those that identify a product as unique. The added value consists in offering products open to change, products that are able to have extra properties that adapt to the user's needs.
Until now, a product could offer you, just fixed tiers, but many of the coverages will be useless. The worst part of it is to leave the customer with the feeling that he is paying for coverages that he does not need. The customer must be able to choose, based on their needs, how to expand their product at a given time and that is what will be configurable in the system.
Let's imagine a person who wants special coverage depending on where they travel since the risks will be different. That versatility is already possible, but not all insurers are able to offer it.
Insurance is made for the majority, but a huge market opens up for the big minority. Some very selected users, who we call early adopters, and are revolutionizing all industries. Users who will drive the industry in the next years.