An active and constantly changing insurance market is forcing Asian insurers to rethink their business models. In doing so—and in order to gain competitive advantage—insurers will need to hone business tactics and develop long-term strategies for data and technology, customer service, brand, products and services, manufacturing techniques and distribution efforts.
Specifically, insurers need to apply data mastery technology and customer science, which is intended to increase understanding of customers; rethink their brand, products and services to better appeal to customers; apply new manufacturing techniques to reach operational efficiencies and maximize value; and understand the changes that affect the distribution channel landscape and invest accordingly. The recommendations are part of a newly released report from Celent, “Tomorrow's Leading Asian Life Insurer.” The report is authored by Wenli Yuan, a senior analyst with Celent's Asian Financial Services practice.
"Applying data mastery technology and customer science is the foundation of the other three areas. Customer science should be applied in marketing, product/service, process, and distribution," Yuan said in a prepared statement about the report, which was released in September.
There are several drivers impacting the insurance world and the business models of Asian life insurers, according to the report. These include greater and much easier access to information, which makes the market more price transparent and provide customers with greater bargaining power. Customers are also more demanding: they expect real-time service and simple business processes, and the report notes that in Asia, customers are starting to see auto and household insurance as commodity products. The amount of digital information and data—combined with always-on connectivity is also impacting the market—providing greater opportunities for analysis, predictions, feedback and control.
Asian insurers are responding to these changes with renewed focus on business strategies in three key areas, according to the report. These include growth and retention, especially since low insurance penetration and density in most Asian markets show large development potential. As such, insurers are looking at using technology to reach new and retain existing customers, optimize processes and diversify activities, products and services based on knowledge gained from the analysis of customer data.
As Yaun noted in his statement, technology and customer service are the foundations of the other key areas in which insurers need to focus their efforts in order to success in the constantly changing insurance market. The report identifies the technologies of data mastery—the ability to extract useful business information from raw data—as fundamental to insurers’ initiatives, pointing to the use of data warehouses, data marts, CRM, unified presentation layers, and business intelligence. According to Celent, there are two main categories of data mastery. Analytic data mastery involves giving senior executives and business strategists sufficient information to make sound decisions, and operational data mastery involves giving knowledge workers the information that they need to do their jobs effectively. Big Data continues to be a challenge for insurers, and plays a vital role in insurers’ use of technology. Other technologies detailed in the report include cloud-based analytics solutions, analytics appliances, Hadoop, and more.
Leveraging data mastery and applying customer science can help insurers refine segmentation and pricing, evolving more traditional ways of using a cost-oriented approach to defining insurance product prices to techniques that consider more elements. Customer data allows insurers to analyze and identify segments through modeling customer behavior, claim propensity, and the market environment, according to the report.
Asian insurers can also more effectively capture the full potential of existing customer relationship in order to grow profitably. According to the report, insurers should understand a customer’s holistic risk profile and protection needs and create solutions to meet those needs, as well as integrate risk insight with softer aspects of relationships, such as knowledge of customer life stage and associated needs. This information can inform cross- and up-selling strategies.
The report suggests insurers should revamp brand, services and products in order to better appeal to customers. This includes the addition of new and relevant features that are useful or are perceived to be useful to, for example, customers who have a new child. Insurers should also reposition products and services; for example, insurance offerings could be enveloped within a wider set of financial products that are perhaps more immediately needed. The report also provides best practices suggestions and recommendations for improving manufacturing and distribution of insurance products and services, such as refining their multichannel management strategies by prioritizing a service-oriented architecture (SOA) approach that integrates their front and back office and promotes a high level of automation, and supporting multiple access methods, such as browsers, telephone, mobile, SMS, etc., to support new business as well as customer service.
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