Why Insurance Companies Need a CDP?

Over the years, the insurance industry has grown significantly. According to Associated Press Research of New York, the worldwide insurance providers industry is expected to be worth $3.6 trillion by 2022. The current digital revolution has given insurance businesses several channels through which to demonstrate and advertise their products to clients. They are no longer reliant on a single distribution channel. However, the emergence of new channels has provided insurance marketers with a significant issue – one of managing data across a multitude of sources and channels.

To strengthen and expand digital conversions, they must first understand their customer’s particular needs. Understanding consumer demands aids in the provision of tailored solutions that attract, engage, and convert them into customers. Cracking this, however, has been a challenge everyone has been working around in their own ways.

Over the last two decades, an advanced new solution known as the Customer Data Platform (CDP) has established a solid market presence. The unique selling feature of a CDP is that it can assist marketers in creating a single unified view of each consumer. This perspective may provide insurance marketers with the capabilities to manage their wealth of data, and use it to target clients with customized suggestions and offers.

Many marketing systems have made great promises to enable customization during the previous few decades. CDPs are the most recent arrivals, and they have learned from the mistakes of their predecessors. To comprehend the significance of CDPs, it is vital to take a moment to consider the two extensively utilized marketing solutions: CRMs and DMPs.

• Customer Relationship Management Platforms (CRMs): CRMs are among the first marketing tools. They rely on known customers or qualified prospects (so-called 1st party data) and keep track of customer experience. CRMs were not meant to gather treasure data autonomously from digital touchpoints and create behavioral and/or contextual patterns. To address this need, a new type of tool emerged: DMPs.
• Data Management Platforms (DMPs): DMPs' growth coincides with the digitization of sales. They were designed to gather and process "third-party service," which is anonymous data derived from the customer's cookies. DMPs are built to create targeted display advertising based on identified audiences. However, their inability to incorporate first-party data, as well as the projected expiration of cookies, will signal the end of their usage.
• CDPs introduced a new capacity to the market: the ability to mix third-party and first-party data, construct unified consumer profiles, and create segments. Giving advertisers the power to connect what they currently know about their consumers in real-time with behavioral and contextual data. CDPs assist insurers in developing a more detailed profile.

However, it is unknown what the end of the cookie era (anticipated by Google within the next two years) would entail for the industry. Insurers can clearly foresee that they will need to adjust to the new consumer data market as well.

The Customer Data Platform for Insurance Industry and the Data Challenge

With a major portion of its transactions still handled offline, a segmented digital environment, and an often-out-of-date IT infrastructure, insurance businesses may find it difficult to provide a seamless omnichannel experience.

Although this is not true for the whole insurance business, it is notably significant for the majority of the heavyweights. Because of their network of touchpoints, a large amount of data has become worthless due to fragmentation. Many insurers, for example, cannot distinguish if a consumer already has travel insurance purchased through call systems, life insurance purchased directly in-store through its agents, or if the customer has downloaded the mobile app. This characteristic prohibits marketers from developing an end-to-end perspective of their customer’s behavior and preferences, putting the company's image in danger owing to miscommunications.

All of this connection data exists, but in networks that do not communicate or communicate in an ineffective manner with one another. As a result, we believe that installing a CDP for insurance may assist insurers in collecting data but, more importantly, in taking action (activating) depending on certain segments. While needing only a minor technological integration, this data may be converted into valuable marketing information. In fact, the majority of CDP for insurance suppliers provide a diverse collection of connections. Furthermore, it will assist insurance marketing teams in refining their demands without committing to a long-term commitment.

Putting underwriting back in the center of the Insurance Industry

Insurance pricing is now changing into a more dynamic model that takes into account, among other things, consumer lifestyle, the customer's surroundings, and the risks connected with it.

Professionals who evaluate and analyze the risks involved in insuring people and assets investigated for this new pricing model now consist of compiling a list of characteristics that will allow them to establish a generic risk profile, review historical data, or compare offers from rivals. Because each policyholder has a unique risk profile connected to his behaviors and insurance environment, premium computation is dependent on the customer's inputs.

However, data-driven innovation, such as CDP (when paired with a wholistic data setup), might be leveraged as an asset to reintroduce underwriting into the insurance industry.

Underwriting businesses will be able to obtain hyper-detailed risk assessments of their consumers by combining internal and external data from numerous sources. The advantages are numerous, including more accurate risk pricing to better reach all segments, as well as an automatic screening of risk variables and responsiveness to new risk trends in a real-time model. Furthermore, rivals will be unable to see this real-time model.

Active risk assessment in best-in-class revolutionary pricing leverages captors and telematics data to compute correct insurance. Car insurers begin to sell gadgets that track and monitor driving behaviors as well as assess drivers' risk profiles.

However, the first stages may be readily accomplished by utilizing external public risk data (mortality table, environmental data, etc.). In a world where socioeconomic hazards are getting increasingly unpredictable, how about updating parameters in real-time?

When compared to other businesses, the Customer Data Platform for the insurance industry has numerous unique characteristics: IT specificities, regulatory limits, and price complexity. While overcoming these multiple difficulties may have looked insurmountable a few years ago, the advent of CDPs has changed the narrative. Based on the many features of the insurance sector, it looks to be one of the CDPs' ideal clients.

The Bottom Line

Personalized 1-1 marketing strategies across the lifespan are the future of insurance firms.

This enables you to develop a more engaging client connection and reposition them as a true-life adviser who is concerned about the customer's health and security. This is only achievable with a comprehensive understanding of each customer's condition, needs, and life stage, as well as the Customer Data Platform's capacity to engage in a timely and appropriate manner.

The basic drivers underpinning a new generation of engagement capabilities that alter your consumer connections are hyper-personalized, real-time, and multichannel. They will greatly raise corporate value by increasing revenue per insured.

Altudo offers comprehensive analytics and consumer interaction solution for insurance companies. Also, get access to our highly erudite CDP assets and get a free consultation now!