How Insurance Companies Can Adopt Personalization in 2021

The days of traditional insurance are fading as insuretechs completely transform insurance products and services and their delivery method. Read on to learn how to personalize your insurance offerings and marketing successfully and where to start.
14 min read
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By Peter Rakowsky
Global Innovation Manager
How Insurance Companies Can Adopt Personalization in 2021

According to Youbiquity Finance report, 21% of customers say their insurance providers do not offer any customization. The same research indicates that 80% of customers are craving personalized offers, and 77% are willing to trade their behavioral data in exchange for lower premiums and quicker settlements.

Jim Caroll
With COVID-19 exposing a vast segment of the population to the delights of stellar online services such as Amazon and Apple, consumers now expect every company and every industry to offer this same level of professional service... which increases expectations for personal insurance.
Jim Caroll Trends and Transformation Expert at J.A.Caroll Consulting

Let’s explore how insurance providers can benefit from personalization and what companies already increase customer retention and bolster revenue with this approach.

What Does Personalized Insurance Mean for Insurers?

Unfortunately, when most insurance companies talk about meeting personal needs, what they mean is segmentation. But the two offer differing levels of product elaboration.

Samantha Chow
Insurers don’t personalize their offerings on the individual level, but rather segment their target audience by a variety of characteristics and then forecast what may seem to be most appealing to them. That’s the key difference between personalizing insurance for a group of similar individuals, versus one particular person’s needs.
Samantha Chow LAH Markets Lead at EIS Group Ltd

Insurers with powerful data analytics will deliver much-needed individual targeting and be better positioned than their competitors. Earnix, an out-of-the-box solution for personalization, predicts that better tactics can increase revenue by 60% per customer, improve customer engagement by 89%, and grow broker channel effectiveness by 60%.

Gordon Watson
The business benefits of personalization are clear: sales, customer loyalty and engagement, and a higher success rate when cross-selling.
Gordon Watson Chief Executive Officer at AXA Asia

Good examples of insurance companies with better customer-targeted services are Cover, Trov, Root Insurance, and Metromile Insurance Co. According to SP Global publication, Root was the third fastest-growing auto insurance company in 2018. Its revenue shot up from $4 million in 2017 to a massive $106.4 million in the last quarter of 2018.

Root offers personal auto insurance policies through telematics devices that record customer behavior. This approach enables them to tailor bespoke offers for each customer while effectively handling risk management.

Metromile, on the other hand, tapered its services by providing personalized suggestions depending on miles driven (as opposed to driving behavior). Bear in mind that these two companies are new players (or small fish) - yet they perform incredibly well.

So, if you’d like to be among innovators demonstrating overwhelming revenue growth, it’s time to implement approaches to make unique propositions for different types of customers. Otherwise, you can just stand by.

So, where to start?

When offering personalized insurance, your focus needs to be on core growth areas: customer experience, product development, and improved online services.

Step 1. Learn Customers’ Needs and Exploit Data

With customer experience, you must find out what a particular customer or a segment of customers wants. Do they want more payment choices? Do they want a dedicated call center? Do they want advice on how they can keep their premiums down? Do they find your billing process to be long-winded? By zeroing in on these and other client pain points, you will effectively cater to their growing demands.

For beginners in the field of personalization, KV Dipu, President & Head of Operations Bajaj Allianz GIC, Asia, had this to say:

KV Dipu
Our five-step path is: (a) listen to customers, (b) figure out their stated needs as well as their latent needs, (c) review the current landscape of systems and processes, (d) re-engineer/reconfigure them to meet customers’ needs, and (e) deploy the right technology stack.
Also, build clear strategies around the usage of data and analytics, as these form the basis of your personalization efforts.
KV Dipu Head of Operations Bajaj Allianz GIC, Asia

If you do not have a lot of data, then you might need to reach out to customers via interviews, emails, phone calls, messages, or web-based cookies to learn what they demand. But to guarantee quality inputs, you need to enlist third-party sources to provide more detailed information about your customers. For instance, for US-based insurers, Samantha Chow suggests enriching data with records delivered by LexisNexis, TransUnion, Motor Vehicle Records (MVR), Medical Information Bureau (MIB Group), and Milliman. How to apply this information? Let’s dive into use cases applicable to customize different insurance services and their marketing.

Step 2. Personalized Insurance Packages

Since different subdomains are distinct, their approach to personalization is diverse.

Jim Caroll
Flight specific drone insurance is offered on a case by case basis. Life and wellness policies are based on real-time healthcare information - if I show good blood pressure and glucose control with an active fitness regimen, I should get a break. And obviously, there is performance-based auto insurance. Anything which is easily measured and instant, or fact-based, and which has a fast-moving, disruptive technology involved is a target.
Jim Caroll Trends and Transformation Expert at J.A.Caroll Consulting

Let’s consider some insurance packages that you can tailor to suit each of your customers, according to their unique needs:

1. Personalized Health Insurance

As with any personal targeting, people-first healthcare solutions need data. This means getting your client’s email, phone number, residential address and requiring them to utilize wearables and smart devices.

Smart devices and other wearables that send data to insurers are key to providing a real-time insurance experience. When your patient’s vitals indicate the emergence of a serious condition, you can recommend immediate treatment, or send them new content designed to help them change detrimental behavior. This is a situation where the tech comes in very handy.

Gordon Watson
The prerequisite of any type of personalization, regardless of industry, is data. The way that insurers collect data and how they interpret and use it is critical. While data analytics technologies play a significant role in helping us uncover patterns and support decision making, it is equally important to understand the needs of customers through face to face connection, whether in person or virtual.
Gordon Watson Chief Executive Officer at AXA Asia

When you collect data, your next step is to analyze it. It’s preferable to create a custom solution, if possible, so it is designed to correspond to your particular needs. Otherwise, out-of-the-box data analytics tools like Majesco and Ivans Markets can be of use.

If your data engines cannot venture further than setting up pilot programs, you need to have them overhauled and replaced with scalable solutions, as this is critical to growth. Good examples of companies with powerful in-house data analytics tools are Europe’s AVIVA and China’s Ping An.

In short, your data engine (whether in-house or outsourced) must be able to do the following:

  • Collect diverse data types
  • Generate comprehensive data insights
  • Link data to decision-making
  • To address all customer needs, personalized health insurance companies use data from different sources, such as wearables (e.g., Apple Watches, Fitbit heart monitors, and so on), and DNA sequencing, and process it with the help of artificial intelligence and machine learning.

    Smart devices and other wearables that send data to insurers are key to providing a real-time insurance experience. When your patient’s vitals indicate the emergence of a serious condition, you can recommend immediate treatment or send them new content designed to help them change detrimental behavior. This is a situation where the tech comes in very handy.

    Although there are various ready-made solutions, like Applied Systems, insurance experts advise focusing on custom development to meet your specific needs.

    Theresa Blissing
    There are many great companies out there that can support insurers if they do not have their own data capabilities. But it’s important to understand that insurers need to be in charge of their own data, in order to be able to understand its value – what data to collect, and implications for data privacy and security. Tools from an external provider then come in to help them analyze their own data in a meaningful way.
    Theresa Blissing Director at Accelerating Insurance

    At the moment, there are a couple of ways to adopt somewhat personalized healthcare insurance for each client. After enrollment, you need to connect via email, SMS, or a call, for a quick Q&A.

    Some companies create and send out personalized communications to their members on how to stay healthy. The content can be in the form of videos on diabetic prevention, fitness membership discounts, or even targeted prevention campaigns.

    You must do thorough research and find every opportunity to create content. Doing this ensures the customer knows that you care about their well-being and are not just interested in selling policies.

    Take Lemonade: it uses its AI-powered chatbot (Maya) to collect and analyze customer data. The data can then be used to tailor custom prices for each client.

    Lemonade Chatbot Maya
    Source: Lemonade

    While personalization is the future, inaccuracies are bound to occur. For instance, customers with a low-risk profile enjoy lower premiums until the day they call in for a claim, and their rate jumps.

    And a customer will not be satisfied if they realize that their visits to a bar, or participation in dangerous sports like skydiving, negatively affects their premium. They will, of course, start to leave their phone and other wearables at home. These data inaccuracies can be the cause of instability.

    2. Personalized Car Insurance

    Personalized car insurance aims to provide coverage based on a customer’s own needs and risk profile. The approach diverges from traditionally unfair one-size-fits-all policy allocation.

    Insurers can create a custom policy based on an individual’s driving record, annual mileage, expectations, car model, and age. Newer cars are fitted with telematics devices with AI capabilities to deliver accurate information on factors such as driving speed, distance covered, current location, and so forth.

    Through connected experiences, some companies like Ford and Metromile allow their customers to file claims or ask for assistance via AI assistants. They simply send pictures of their cars in, and the assistant takes them through the filling process, verifying the legitimacy of the case, and dispatching funds.

    For those with comprehensive coverage, some assistants can direct a customer to repair shops, contact the nearest towing services, book a rental car, and much more. Companies like Direct Assurance (a French carrier) produce apps with smart features that help drivers enjoy better experiences. For instance, clients can get alerts when parking in the wrong spot, protecting them from unnecessary fines.

    Direct Assurance’s YouDrive program collects data from an installed GPS and accelerometer. The GPS tracks location, and the accelerometer records driving events like cornering, braking, distance covered, and high-speed turns. The generated report is used to adjust monthly policies by up to 50% for the insured. Personalized email alerts are also sent to help the driver modify their driving behavior.

    Areas of personalized car insurance that still need more refinement involve hit and run, and other complex-to-prove claims. Additionally, the insurer must infringe on its customer’s privacy rights by tracking their movements, in order to craft an effective targeting strategy. Examples of companies already using telematics include Metromile, Progressive, Nationwide, and Safeco.

    If you are looking to initiate personalization of car insurance in your company, start by investing in the analysis of data obtained by telematics and other smart devices. If you don’t have the capital for this, team up with bigger companies. This can be a successful strategy - the partnership between Ford Motors and Metromile Insurer seems to be working out pretty well for the latter!

    If you need help setting up client monitoring, advanced analytics, or reporting tools, you can talk to DataArt. We have experience creating driving style assessment telematics tools to assess drivers’ risk. These tools integrate with cars and come with a mobile app for collecting and uploading driving data.

    Other automotive areas that DataArt can help with include smart ecosystem integration, car-to-cloud communication, Driver Safety apps, smart car applications, and a lot more.

    3. Personalized Renters Insurance

    Unlike personalized car and health insurance, where telematics and smart devices monitor behavior, customized renters insurance requires a different approach. Policies are tailored individually based on factors such as opting for a bundle policy, the presence or absence of security staff, CCTV, smoke alarms, and fire extinguishers, and other home-specific data.

    Fast-growing brands like Lemonade, Allstate, Nationwide, Geico, and Progressive allow customers to fully customize who or what they wish their policy to cover. This can be done through an app or the company website. The change will take effect the moment your extra items are approved.

    The only challenge in this domain (and in many others) is that it can be hard to judge an individual’s changing behavior patterns without a smart technology tool, so the chances of bearing risk are high. In addition, inaccurate data is of no value to a company’s targeting strategies.

    To get started with personalized renters insurance, you need an app that gives customers the opportunity to tell you what they want to be covered. The approvals process must be quick. Like Lemonade, make it a point to dispatch claims as soon as possible, without customers having to visit your offices. Companies also need to work on AI-enhanced chatbots that can answer questions and solve problems for customers.

    Step 3. Personalize Marketing

    Customer-specific marketing is still a nascent approach in the insurance domain. However, Earnix indicates that industry frontrunners, who have tailored individualized policies for their clients, have seen an increase in profits, improved customer retention, and increased revenue per customer.

    Advanced Personalization Increase

    Laser-focused personalization approaches are not difficult to achieve with the right data - and fortunately, there are many ways you can get this data from your customers and prospects. You can collect data from their social media accounts or use cookies on your website to track their online moves. However, interviews and calls are still among the most effective methods when identifying prospects’ needs. IoT-connected devices like smartwatches, heart monitors, smart home alarms, and others are less personnel-intensive, as they relay data straight to your cloud for use. These tools allow you to generate revenue while keeping costs down.

    Personalization Reviews Cost Reduction

    The data you get from wearables and other devices should be put into actionable segmentation strategies. Advanced analytics tools like Earnix, Quantemplate, Axis, and Bleeding Edge can then analyze data based on a customer’s location, behavior, and preferences, to unravel personalization opportunities.

    When personalized marketing is done correctly, it can improve an insurance company’s ability to:

    • Recognize their customers’ and prospects’ interests, demography, and location for precise targeting.
    • Remember their customers' history based on what they browse and buy. This can be possible through cookie tracking for web-based clients.
    • Reach out to buyers with the right product, service, and advice based on their actions, interests, and preferences.
    • Deliver personalized digital offers to every customer throughout the year.

    Following the above approaches can help you forge long-term and meaningful relationships with clients, optimize prices, prevent losses, and gain a competitive edge in your domain.

    So how can insurers build effective personalized relationships with customers? Data is always the starting point. Once you know their unmet needs, you can begin to respond with relevant triggers. This stage calls for other infrastructure, like mobile apps, insurtech tools, and chatbots.

    Timing is of the essence, and with insurance deals, the best time to target someone is within 60 days of their policy expiration.


    People’s expectations can now be married with technological innovations to provide more seamless, personal experiences.

    On one hand is the privacy issue. But customers are more willing to share their email address in exchange for cool offers. Studies indicate that truck drivers are more willing to be tracked as long as it brings their premiums down. Swiss Re research shows that a lot of people are open to sharing their wearable data in exchange for better policy rates. So privacy is not as big of an issue as many might assume.

    On the other hand, advanced digital technologies are helping insurers to create new and innovative products and services. These seemingly minute yet revolutionary steps are giving them the much-needed competitive advantage to stay afloat in the digital world.

    However, when full-fledged personalization (when a company makes a very unique offer for each client) remains unreal, insurers are advised to start with an appropriate segmentation of their customers. Otherwise, they’re missing out.

    As the industry gears itself towards personalization, your company could find itself unable to compete. But the move towards the future need not overwhelm you - you still have the opportunity to capitalize on the benefits individualization offers.

    If you don’t know where to begin or how to make the most of your data, ask for expert advice from DataArt industry moguls. We are here to help.

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