James Burton discusses the importance of the single customer view, and how insurance providers can leverage the customer data they already hold through linking and matching technology
Separated database infrastructures, high levels of switching, and merger and acquisition activity have made customer data management a major challenge for the insurance market. As insurance providers bring increasing attention to renewal price movement, the urgency to find a solution to this challenge has risen.
Insurance providers need to understand their existing customers’ risk to a greater degree so they can deliver fair pricing and outcomes at renewal. In essence, they need to create a single customer view based on all the previous touchpoints and history they have had with that customer.
By pulling together data from quotes, renewals, claims and marketing, insurance providers can build a comprehensive and accurate representation of a customer’s identity, wherever they are in their dealings with the brand. It also means a provider can use a consistent methodology for standardising and matching customer data across multiple databases. Perhaps most importantly, it can help determine that the right product is being offered for the risk presented at renewal, and at the right price.
The problem is that integrating data for consistent use across the business can be complex. Consumer data can end up being stored in disparate databases, where it may become outdated, incorrect and inconsistent. Individuals may appear multiple times across separate customer databases within the same insurance group, with no link being made between records.
Linking the data becomes even more of a challenge when factoring in address changes, name changes or input errors. Aside from the negative impact it has on customer service, data inaccuracy can lead to inaccurate pricing at renewal and a lack of understanding of the best product for the customer’s needs. It can also create the risk of fraud, leading to wasted marketing budgets and increased operational costs, as well as lost opportunities for cross-selling and upselling.
Solving the challenge of linking and matching customer data to create a single customer view in the insurance market comes down to using insurance specific data, analytics skills and technology.
Putting it all together
Patented linking and clustering methods can now help insurance providers to link all their data assets together. This means one ‘true’ record can be created for a customer using a unique identifier, giving an insurance provider a consolidated view of its customer based on every contact or policy it has had with that person and creating the foundation for all future dealings with them. It means that when it comes to enriching the data using external datasets, this can be done with the confidence that the core customer data is accurate. The picture of the individual’s risk can then be enhanced as more data is accumulated.
Linking and matching works by finding common threads between records in order to match up disparate data. The process pulls on a wide range of external datasets, including public records and insurance policy history data gathered from across the market. Records with commonalities are linked together and assigned the same unique identifier. This process can be done in batch form for all existing customer records and at the point of quote so that new customers are also assigned a unique identifier.
Marketing, customer services, pricing, underwriting, portfolio management and claims can all benefit. If they consolidate details about a policyholder, insurance providers can see all points of their relationship with that person and thus provide more relevant and customised products and services. Fundamentally, it can support accurate pricing based on an accurate understanding of an individual’s overall risk, as well as their assets for new business and, more pertinently, renewal.
In addition, when existing customers are approaching policy renewal, some may be shopping around and requesting new business quotes from their current provider; in these cases, the unique identifier can flag these customers to support pricing consistency.
Insurance providers are under pressure to ensure they are using the data they already hold and have access to the information they need to deliver fair pricing and outcomes for customers. The single customer view can provide the foundation for building a clearer, more informed picture of the customer to help ensure the product and price are appropriate for their needs.
James Burton is senior director of product management at LexisNexis Risk Solutions, Insurance, UK & I