Driving the data in insurance

Why a student-run car insurance firm is showing the insurance sector how its data expertise can make customers more loyal.

As university students, James Noble and George Abbott became so frustrated with the tedious process of trying to find affordable car insurance that they formed their own company to help young drivers.

The insurance industry has been data-led for 300 years, and numbers and insight fuel Noble and Abbott’s MyFirstUK insurance business model.

An insurance brand that aims to be perceived as trusted and cool rather than dusty and corporate, MyFirstUK obtains most of its data via social media, offers drivers advice and guidance and uses engaging competitions (with prizes including free meals at Nandos) to acquire customer information such as renewal dates.

“We know from our data and from our own experience that the insurance industry has not properly catered for this demographic,” says 23-year old Noble. “Data helps us to formulate our approach to young drivers, market to them and ultimately build a totally different relationship when compared with a traditional insurer. We are disrupting the repetitive nature that all companies in this space seem to follow.”

Gaining loyalty in such a price-driven sector as insurance is always a challenge, but it is possible, according to Roy Jubraj, digital lead at management consultant Accenture.

He says insurers need to become better at understanding the data they hold to develop new business models that fit with their customers’ modern connected lives.

“The internet of things (IoT) provides an opportunity to create a business model based more on customer service,” says Jubraj. “The actual insurance transaction will become secondary.”

He cites the example of an insurer using real-time data to reduce the risk of a serious water leak in the home. A smart device supplied free by the insurer could monitor flow and ensure the water supply is automatically turned off if data reveals there is a risk of a leak and flooding.

“Insurers are experts at using data and if they can help a customer’s lifestyle using technology and insight they can improve loyalty and also reduce the number of claims,” says Jubraj.

Historical data has supported the traditional insurance business model for centuries, and today telematics data collected from smartphones is improving pricing models and underwriting decisions.

Adam Gooch, commercial director at Insure Telematics Solutions, says the data transmitted via smart devices makes it easier to assess the risks that individual consumers present.

“The sources of data available are greater than ever and telematics does inform decision making, which is a key part of any new business model,” says Gooch.