Harnessing data
real-time insight

31st May 2018

In a world where data intelligence is widely used to enhance customer experiences and gain competitive advantage, insurance retailers can't afford not to be in on the action. In the wake of the Cambridge Analytica scandal and the damage to Facebook's reputation (not to mention its share price), companies need to be mindful of the importance of using data responsibly, not least to avoid falling foul of the law. Using customer data correctly should be seen as an opportunity to enhance customer relationships and build trust rather than a legal minefield to be navigated.

The power of data
Used in a sophisticated way, data has the power to set one retailer apart from another. It's used to gain insight into consumer habits and preferences, more accurately evaluate risk and produce better-informed rating decisions. For example, detailed information on individual properties and vehicles are now available from leading data providers. This information can be more accurate than the consumer is able to provide themselves and consequently paints a better picture of the risk than responses to questions alone. This allows customer experiences to be personalised and insurance propositions to be tailored to the individual.

Hummingbird is CDL's ground-breaking, bespoke data intelligence solution. It conducts complex searches from a range of sources and analyses potentially millions of records to deliver insights in a fraction of a second. Integrated with CDL's real time pricing module, this is an invaluable tool for businesses.

Hummingbird is especially adept at the detection and neutralisation of fraud. It does this by detecting suspicious patterns of behaviour and identifying if customers are manipulating data in order to obtain more favourable premiums. Not only can Hummingbird detect fraud before a quote is generated, it can undertake a range of actions to address suspicious behavior in real time, including redirecting the customer to a contact centre, flagging for post-sale validation or declining to quote altogether.

It has been reported that over a third of consumers believe that manipulating data fields is an acceptable way of reducing their insurance premiums. This widespread belief, combined with the demise of face-to-face broking and the huge volumes of quotes generated online (consider that there are 31 million cars on the road, yet CDL's systems respond to over 170 million private car insurance quotes requests every year), means that not only is fraud very prevalent, it's also very difficult to detect and act upon.

Hummingbird offers a 21st century solution to this modern problem, and customers using this service are realisin­g significant operational savings, dramatically reduced costs related to bad debt and a significant declin­e in cancelled policies. Meanwhile, insight into potential quote manipulation enables insurance retailers to intervene where necessary to help customers make sure that the application data accurately reflects the risk.

Big data, done right
Whilst big data is clearly going to continue to be an indispensable source of value for the insurance industry, it needs to be handled carefully and responsibly. There are legal, reputational and ethical reasons for this.

Data protection legislation has been around for decades, but with the new GDPR legislation, insurance retailers are faced with new rules, which make it more imperative than ever to be transparent about how data is being used. Reaction to recent lapses in security by household-name brands, such as Google, Yahoo and Facebook, show how important compliance with these new laws will be in maintaining goodwill.

The key to getting this right is not viewing the responsible handling of consumer data as something that should be done grudgingly, but an opportunity to add value for customers and build trust.

Finding the opportunities
The insurance industry should look at the new data protection laws as an opportunity to develop better relationships with customers and demonstrate a consideration for individuals' privacy.

Companies handling large amounts of consumer data should start by working with reputable solutions providers, so they can be confident that their customers' data is handled correctly. They can also be thoughtful about how they ask permission to use consumers' information and explain how they'll use it, including benefits such as personalised deals. Insurers or brokers can also use supplementary infographics to explain in simple terms how their algorithms work.

Small initiatives like this would serve to differentiate one insurer from another based on trust and transparency and serve long-term business objectives. Companies that get this right stand to gain enormously.

If you're interested in how data intelligence can help you detect fraud and add value for your customers, visit: https://www.fasterthanfast.com