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The role of the consumer in the creation of insurance products

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By Richard Jefferies, Insurance Industry Sales Lead, Liferay UKI

 

Today’s traditional insurers face a slew of historic challenges. The COVID-19 pandemic was particularly disruptive for UK insurers. In addition to the adjustments we all faced in 2020 and 2021, insurers faced a huge spike in customer contacts. In fact, a report by KPMG quotes one insurer as saying that it saw a 1000% increase in customer inquiries, claims and complaints. The challenge presented by upstart insurtechs also hasn’t gone anywhere, and may have even been exacerbated, thanks to the growing general comfort with digital technologies.

Combined, those factors mean that business as usual simply isn’t an option. Insurance is a grudge purchase at the best of times and if an insurer isn’t meeting a customer’s expectations, they’ll very quickly jump ship.

If they have any chance of meeting — or preferably beating — those expectations, they don’t just need to innovate and adapt. Instead, they need to actively involve consumers in the creation of their products.

 

The power of CX

Most industries today understand the importance of good customer experience. It’s worth pointing out, however, that 66% of customers expect companies to understand their needs and expectations.

That’s as true for insurance customers as it is for any other industry. And yet insurers have been historically poor when it comes to engaging with their customers. Stats show that more than 90% of insurers worldwide do not communicate with their customers even once a year and that 20 to 40% of their customer base will not receive a single communication all year.

And while the rapid pace of digital transformation over the past 18 months or so may have improved that, the fact remains that no insurer can be certain that it’s giving its customers what they need if it’s not engaging with them.

 

Digital and adaptability

Fortunately, digitalisation has made it increasingly easy, and lucrative to do so. According to Deloitte research, the likelihood of a prospective customer buying a policy once they apply increases from 70% to nearly 90% when digitalisation speeds up the underwriting and application process to approximately real-time. But simply using digitalisation to speed up the application process isn’t enough to differentiate one insurer from another.

In order for that to happen, they have to take digitalisation and adaptability a step further by bringing the consumer into the product creation process. Even though some insurers might find that concept radical, it really isn’t. Many mobile network operators already allow people to customise their plans according to their needs.

While insurance is heavily regulated, there’s no reason that it shouldn’t offer similar levels of flexibility. A good place to start is by allowing consumers to choose what they can afford. Rather than trying to upsell a customer on something we already know to be a grudge purchase, let the customer personalise a product according to their budget.

Some innovators in the insurance space are already doing this. Others still have gone a step further and allow customers to only activate insurance when they need it. An example of this is allowing customers to turn parts of their car insurance off when they’re not driving.

 

Seamless digital experience

None of these changes, however, will matter if the insurer doesn’t offer a seamless digital experience for its customers throughout their customer journeys. So, even if you’ve made it easy to sign up and switch to you from another insurer, you’ve only gone part of the way.

You need to make it just as easy to update details and especially to file and follow up on claims. The situations in which people make insurance claims are almost always emotive and sometimes traumatic. Whether it’s an automotive accident, weather damage to a home or business, or a major health crisis, the last thing you want is to make your customer’s life more difficult. Even forcing them from one digital channel to another, or not allowing them to seamlessly move between channels can result in a negative customer experience.

Instead, you should aim to engender a sense of trust and make them feel  they’re being supported and guided through every interaction they have with you.

 

Engagement and evolution

By giving consumers this level of choice on an ongoing basis, insurers also give them more opportunities to engage with the product. That’s critical, because it means they’re more likely to make contact when their circumstances change. If you give them control, they’re more likely to view your brand favourably and engage with you more frequently. Combined, these improve the overall customer experience.

Another important fact is that these engagements also act as data points, meaning that consumer choices become a part of the algorithm. In turn, this allows insurers to offer better products and services to their customers. In effect, it creates a virtuous cycle that benefits both the customer and the insurers.

If UK insurers are going to survive and thrive in a post-COVID world, it’s important that they understand and embrace this. It is, without doubt, their best chance of success. And in a constantly shifting world, it is also their best hope of avoiding disruption.

 

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Turn the data landfill into an insight goldmine

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Andrew Watson, CTO, MHR

Today, businesses have access to a wealth of data, with vast amounts of information created daily. While tools exist to help companies make sense of it and take advantage of the critical insights that data can bring to drive stronger business growth, many organisations are simply overwhelmed with the volume and velocity of data collected. With this, there is also a sense of uncertainty on how best to leverage this to create data driven insights.

Disjointed processes and dormant ‘shelfware’ are keeping a wealth of data stuck in silos – untapped and underutilised. As a result, nearly three fifths (57%) of UK organisations say they believe they are making business decisions based on inaccurate data. Without a clear strategy to guide them, organisations will be running blind, unable to access and get value from the relevant data to make stronger predictions and smarter decisions.

And the longer data is left untouched, and the more of it that is generated, the harder it will be to leverage it to its truest potential. Organisations must urgently recalibrate their relationship with data and learn how to integrate and analyse it to find trends and useful information. Leaders should see this as an opportunity to utilise the right tech solutions to harness the power of data as a vital source of competitive advantage and turn a digital landfill into a goldmine of data.

 

The data treadmill

Andrew Watson

Every day data is captured by every department in every business. No matter how big or small an organisation is, it is generating invaluable insight from customer patterns to trends on the efficiency of internal processes.

But with this level of data generated, many are finding themselves on a data treadmill, constantly working to ‘catch up’. These organisations are failing to make progress as they are not utilising or optimising the data tools at their disposal. In fact, very few companies are fully embracing the spectrum of tools and methodologies available. Most businesses are spending disproportionate amounts of time on manual data processes, resulting in a ‘reporting lag’. By focusing on simply managing the mechanics of data, such as moving and storing it, businesses are struggling to unite and access real-time data insights, instead creating disjointed silos that lack the enterprise-wide connectivity and visibility needed to identify where processes can be improved.

For other businesses, the challenge comes from not knowing what they want to achieve with the data, or that they have data at their disposal at all. Unused, unanalysed data is a missed opportunity for leaders to create real business value. This is not helped by organisations rushing into buying new systems during the pandemic and subsequently leaving them gathering dust, or only being used at a fraction of their full potential. In other cases, data scientists have been brought into an organisation, but do not know where to start, as the wider business lacks a smart data strategy underpinned by clear objectives. All too often, analytics are left as an afterthought.

Businesses need to become more data savvy lest they continue to fall even further behind. Not only do leaders need to ascertain what decisions their company needs to make, and where they can get the data to support these choices, but they also need to change their data strategy by putting in place the tools and people that can integrate the data to find previously unknown information.

 

Uniting business strategy and data strategy

However, this requires the organisation to have a business strategy that aligns with its data strategy, so that the data being captured can be used to measure improvements and ultimately drive business growth – after all, more than nine in ten (91%) organisations recently surveyed by MHR acknowledged data-driven decision making as an important factor in their development.

A strong data strategy is a cultural shift that requires top-down leadership. Leaders can ensure that the purpose and use of data within an organisation is directly linked to the core business goals, while guaranteeing that a new data-optimised culture is developed end-to-end throughout the company, bridging the gap between business strategy and implementation. In turn, aligning business and data strategies enables organisations to accurately measure the success of their current approach, providing them the next steps they need to take to continuously improve.

While data scientists can be viewed as a solution, they do not have the in-depth knowledge of how the business operates to ensure true strategic alignment. Alternatively, businesses can leverage the right technology, such as an integrated software solution, to ensure that their business and data strategies are fully intertwined throughout the organisation. With this in place, complex data processes can be streamlined and simplified through automation, empowering businesses to make informed strategic decisions from reliable and accurate data.

With technology in place, business and data strategies can be brought together and can generate eye-opening insights that keep companies on top of their data, ensuring that they are not running blind in the race towards data maturity.

 

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An Entrepreneur’s Guide to Investing in Bitcoin

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Marcus de Maria, Founder and Chairman of Investment Mastery.

 

Over recent years, Bitcoin has been steadily growing in popularity among today’s investors. At the same time, there has been a lot of debate about Bitcoin, and other cryptocurrencies, and their value.

Its supporters argue that it is the future of currencies and investment; its critics are adamant it’s not all it’s cracked up to be and might not make the big profits people are expecting.

To better understand its true stature in the market, we need to look at recent developments. For instance, Bitcoin’s valuation has risen by more than 763% in just one year, easily surpassing the rise in the traditional stock market.

With more and more people buying Bitcoin, it is now gaining the attention of the mainstream financial institutions and platforms, when once Bitcoin was derided, joked about and said would never last.

Marcus de Maria

Fast forward twelve years since its’ launch, and we have Tesla and SpaceX mastermind Elon Musk recently announcing that his car empire will not only buy $1.5 billion-worth of Bitcoin, but will accept cryptocurrencies as payments in the future.

And well-known FinTech companies such as Square and PayPal have also announced their intention to support Bitcoin in the future.

Despite this, the most important Bitcoin development is, perhaps, the recent initial public offering (IPO) of Coinbase Global, Inc. (NASDAQ: COIN), today’s leading cryptocurrency exchange platform.

There is no doubt: Bitcoin is gaining momentum. Recent developments have contributed to the sharp rise in the value of Bitcoin, and asset proponents believe this is just the beginning.

 

Bitcoin background

Bitcoin was created in 2008 by a programmer, or group of programmers, under the pseudonym “Satoshi Nakamoto”. Twelve years on, and the true identity of Bitcoin’s inventor is still unknown, adding a little mystique to this already enigmatic entity!

Essentially, Bitcoin is a cryptocurrency. A cryptocurrency is a virtual “coins” or “tokens” and used in digital cryptocurrency systems instead of physical cash.

Similar to physical fiat currencies, digital coins have no intrinsic value, and are not backed by gold or silver.

Bitcoin is one of the most widely used of the thousands of cryptos now available to the investor.

Considering that the great attraction to crypto is that it’s a decentralized currency, thousands of different types of coin in “circulation” is a big giveaway to how popular it is among users and investors.

What gives Bitcoin its value is the fact that there will only ever be 21 million bitcoins “minted” or “mined” to give its proper definition (more on this in the future).

It’s this scarcity that provides the value, although one Bitcoin can consist of multiple denominations, the smallest being a “satoshi” which is 0.00000001 of one Bitcoin (or BTC as it is also known).

 

Bitcoin & The Blockchain: How does it work?

Bitcoin exists solely on the “blockchain” in “wallets.”

A wallet is the digital equivalent of a traditional bank account for fiat currencies such as dollars, sterling, yen, etc.

The blockchain is a public ledger that is totally transparent and accessible to everyone who uses the blockchain and bitcoin, and now any crypto that is in existence.

Transactions on the blockchain are “peer-to-peer”, meaning the transaction doesn’t go through a “middleman” (i.e. third party that would normally charge a fee for making the transaction).

Crypto transactions also undergo thorough verification and confirmation.

Crucially, every transaction and record of bitcoin activity is encrypted which means no one knows who owns any one bitcoin or where it goes to and from, unless they publically declare it (although the identities can eventually be detected under special police powers in cases of suspected fraud).

Only the transaction itself is recorded and is made visible to anyone.

That is why Bitcoin is a cryptocurrency (or crypto), because it has an extremely high level of privacy to it via cryptography.

“Crypto” comes from the Greek word “kryptos,” meaning hidden.

Bitcoin wallets operate via secret key.

This key is used to “sign” transactions. It provides mathematical proof that the transaction has come from your wallet (or owner of the transacting wallet).

This secret verification stops the transaction from being tampered with once it has been issued.

All transactions are confirmed and appear on the block chain network within 10-20 minutes.

It is this security and the fact YOU – and not the banks – are truly in control of your digital money that is so appealing to users and investors alike.

 

What to consider when investing

Firstly, and arguably most importantly, is risk-factor. Investing in Bitcoin as an individual is a lot less risky than investing as a business.

The mentality must be, ‘this is my business’s money. I won’t speculate with my business’s money, and I am not going to risk my employee’s livelihoods. Yes, I would be crazy not to invest but it would be crazier to risk it all.’

It’s very easy to go all-in and invest a large sum of money when you have it, but that is not really a sensible strategy.

So, to start with, entrepreneurs and business leaders should consider the risks, diversifying their portfolio and starting small.

 

Other Bitcoin Investment Options

There are different options when it comes to investing in Bitcoin.

First, you can invest in a company that uses Bitcoin technology so you will be exposed to it without purchasing it directly. When the value of Bitcoin goes up, the company shares go up too, providing a return on your investment.

I can’t invest in Bitcoin through my ISA, but investing in a company such as Block (previously known as Square) means I have an indirect tax-free investment opportunity in Bitcoin. Investing in a company that utilizes Bitcoin can be more volatile than Bitcoin itself, so more money can certainly be made.

Investing solely in Bitcoin is different, as it doesn’t move so much in value, but the individual company using Bitcoin can go up and down sometimes by 80%.

Buying Bitcoins directly from an app like Coinbase allows investors to “physically” own the asset.

This is an important distinction to make, as Coinbase allows investors to actually buy Bitcoin and store it in their own crypto wallet. That way, investors will be able to gain access to the coin’s price performance and use it as the currency to make other trades.

Owning a standalone Bitcoin is no different from owning any other currency, except for the incredible fluctuations in value.

 

To invest directly into Bitcoin here’s how to get started:

  1. Sign up to an Exchange
  2. Enable two-factor-authentication for security
  3. Get a Bitcoin wallet
  4. Connect the wallet to a standard fiat bank account
  5. Place your Bitcoin order
  6. Manage your Bitcoin investment

When the set-up is complete, what you really need to consider is, how much do you know? I am a firm believer in spending at least 20 minutes a day educating myself on investing. I’ve seen too many beginner investors ignoring that advice and rushing in without understanding how it all works.

Surround yourself with people that understand crypto investment and dedicate time to reading up on strategies and tips that will benefit all investments you make.

Bitcoin is certainly a crypto asset you should be investing in alongside a diversified portfolio. It is certainly a highly volatile asset with large and rapid price swings, which in turn can offer the potential for large returns but also carries a high level of risk.

Before making any decisions, it is critical that you learn how to invest in Bitcoin responsibly and utilise proven, reliable strategies. Once you feel confident with your approach, take that first brave step.

As Warren Buffet once famously said, “Be fearful when others are greedy, and greedy when others are fearful.”

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