- Where Insurance & Technology Meet

Can we Crack the Insurance Shopper’s Genome With Half the DNA Sequence?

Experts suggest that the consumer digital journey is similar in complexity to genome sequencing.  If that’s true,  why do segments of the insurance community feel that they can get all of the information they require with only half of the data that’s available? We’d like your thoughts on this.

Earlier this month, two McKinsey & Company experts – Gadi BenMark and Maher Masri – published an article on the McKinsey site which compares understanding the ‘digital path’ a consumer travels to sequencing the human genome: “converting the vast amount of data regarding consumer behavior and desires into meaningful insights.”

The authors are clear:  This is not easy.  But technical barriers are starting to fall and  the value is real: “we’ve found that companies that are able to assemble larger swaths of the shopper genome to inform the way they interact with customers can achieve revenue increases of 10 to 20 percent,” the authors write.

What stands in our way?

So, with these incentives, what seems to be the problem?  Interestingly it is the same challenge we’ve seen for the last 30 years:  We have to get serious about implementing modern Customer Relationship Management tools in such a way as to take advantage of the current best of breed date.  In this era, that means Big Data sources of first-party information (customer purchase activity, service interaction, etc.) and third party information (“what customers do when they are not engaging with the brand”).

The second element is organizational.  BenMark and Masri suggest that silos in organizations need to be broken down.  Their recommendation is to create teams that “‘own’ a customer segment across the full journey,…oversee every phase of engagement from strategy to execution and have broad cross-functional authority and decision rights.”

The authors suggest that these teams need to have profit and loss accountability for the customer segment and “focus the annual marketing planning and execution cycles on these specific segments.”  A core function is to “make sure that all customer communications are orchestrated, harmonized, and synchronized across every touchpoint.”

This is challenging in the best of circumstances, but is all but impossible in the current insurance industry configuration  without a fundamental change in distribution logic.

Independent distributors are, well, Independent

The Agents Council for Technology – A division of the US Independent Insurance Agents and Brokers of America, Inc.  – created a work group which focused on The Customer Experience.  The outcome was a report which provided a series of recommendations for independent agents to use to “provide benefits in multiple areas of the <customer> journey, and therefore optimize the agency’s investment.”

From my reading, this report is excellent from the aspect of the agent’s relationship with the customer.  But it does little for the complete insurance relationship with the client.  If we take the guidance of the McKinsey authors, we have to go much deeper into integrating data among insurers, agents, and third party service providers.

Is there a path to functional data integration?

There are examples of insurers and agents/brokers who have started down this path.  At last years’ Executive Forum, Jim Ryan from AIG discussed integration of his company’s data with that of some of their major producers. That seems to have progressed well.  But this may have been the exception that proves the rule, as I don’t recall anyone taking this away as a ‘to-do’ when they got back to work.

We are also hearing more comments about multi- and omni-channel initiatives, primarily from insurers (again with exceptions).  But, for existing broker companies gathering data will be a green-fields project and take some years to get traction.

What do you think?

Is the insurance industry prepared for the next generation of customer relationship management?  If so, will there be a new model of data sharing within the independent distribution segment?