The development of data-driven business models is impacting the entire insurance value chain, says Swiss Re Institute.
Its report, Data-driven insurance: ready for the next frontier?, says internet-enabled devices have changed consumer behaviours and expectations, particularly among younger generations.
“As a result of digitalisation, insurers now have direct connection to their customers,” says Jeffrey Bohn, Chief Research & Innovation Officer at the institute.
“With the availability of granular data, insurers can better segment customers enabling them to develop new tailored products and services, and refine existing ones in real time. This benefits customers and insurers alike.”
… with the growing granularity of insights into customer behaviours, the role of insurance is evolving…
The company says that with better insights into customer behaviours, the role of insurance is evolving from indemnification of losses to a broader consultative service on risk prevention and mitigation.
For example, the report says digital data sources signal changes in an individual’s life, such as marriage, a new home, or job. In response, insurers can direct personalised guidance to the client on predictive and prescriptive next-step risk mitigation actions.
Swiss Re says the direct relationship with customers will evolve as new touchpoints and channels become normalised, and back-office processes such as marketing/sales, underwriting and claims administration are increasingly automated, says the company.
“Innovation will continue to transform the insurance industry,” says Thierry Léger, Chief Executive Officer of Swiss Re Life Capital.
“Changing risk environments, shifts in customer attitudes and accelerating advances in technology will be the key drivers of the next few years. We will need to leverage insights from our data and partnerships to upgrade our business practices.”