Insurtech's Leading Trend: Hyper-Personalization Fueling Policyholder Growth in Insurance

August 11, 2023
Mamta Chaurdia

Hyper-personalization is an incredible tool in most product-focused industries ranging from retail to entertainment to food service to drive policyholder engagement. It seems that attending to the policyholder more closely leads to better policyholder growth. Spotify is a great example of hyper-personalization. Rather than simply existing as a music platform that allows policyholders to engage with millions upon millions of different songs,  Spotify employed a hyper-personalization artificial intelligence which keeps users engaged by consistently suggesting new music that aligns with the listening preferences of their user. Furthermore, this aspect of hyper-personalization has aided the platform in maintaining dominance by attracting more users by offering them an unique listening experience. 

Insurance, although not often regarded as such, is as policyholder focused as Spotify and retail brands are on their user interactions.. It is imperative for insurers to engage with their audience, and hyper-personalization is a great way to foster more engagement and heighten retention.

There are two main perspectives for which hyper-personalization drivers policyholder growth in insurance. 

The first is of the policyholders themselves, who want to feel engaged by their insurers. More personalized interactions, check-ins or even simple communication of life events, allow for the policyholder to feel more seen and valued by their insurers. Increased engagement creates ongoing interactions between the policyholder and company – driven by the company and selected by the policyholder, and effective engagement creates a relationship built on positive, meaningful and impactful interactions. But how does one make this engagement effective? Studies have shown that appealing to what is called  the “Lizard Brain”-- the seat of emotion, addiction, mood, and many other  mental processes– is key to keeping policyholders happy.  The lizard brain is a simplification of key concepts that the brain craves: instant gratification, the illusion of control, seeking gains, and focusing on the positive.  Creating policyholder-driven experiences, centering around the lizard brain, will successfully engage policyholders again and again because they are incentivized to which in turn leads to higher satisfaction and retention.

The second perspective is from the insurer who is now able to interact with the entirety of a policyholders’ life. Knowledge about life events, general traits and low points are key to understanding which insurance is required when. Furthermore, knowledge about the policyholder allows insurers to pivot towards a policyholder-focused platform in which they are set-up to provide for their everyday needs, ensuring satisfaction and renewals of their policies. 

Insurance as a business is one built on compassion and trust from both the consumer and the insurers’ side. It is vital that the policyholder feels like their insurer cares about them and is genuinely working in their best interest, and similarly vital that the insurer is able to trust that the policyholder will return what they say they will. However, the lack of knowledge about the policyholder creates a roadblock to this connection– how is the insurer meant to care if they are unaware about what is going on in the policyholder’s life? How are they meant to trust them without knowing anything about them? For that reason, hyper personalization is key towards forging deeper, mutually beneficial bonds. Having access to behavioral trends and patterns about the policyholder can empower insurers to leverage their analytical capabilities and provide the best care in ways that recognize the context of the policyholders’ life, and respond in an empathetic and relevant manner. 

So what are the steps required to accomplish this? 

  1. Insurers must invest in gathering relevant behavioral information about their policyholders. This includes understanding current events in a policyholder’s life but also their greatest strengths and weaknesses.
  2. Insurers must take a step away from product focused sales to policyholder focused insights. It  is more important to take into account what the policyholder may need and provide that to them rather than pitch a high-value, likely irrelevant, insurance product to policyholders that do not need it. This can be a vast undertaking though and making this step in hyper-personalization means rethinking almost every element of the business — from sales incentives, product development and underwriting processes to marketing goals — from the policyholder perspective. It ensures that the policyholder is at the forefront of the mind in every department and that marketing efforts are focused on delivering the best comfort and convenience for each policyholder.

Furthermore,  the use of a digital platform is crucial for the furthering of a hyper-personalized experience. Unlike the potentially inconsistent intuition of a human agent, the insurance engine can use advanced analytics to parse vast amounts of existing data and deduce what individual consumers need. Paired with the additional metrics on the policyholder themselves, a digital platform has the ability to create a much more convenient and helpful insurance agent.

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