Comprehensive protection – the insurers’ holy grail?

Stuart Riddell Stuart Riddell

Turning customer engagement on its head may prove the answer to the industry’s permanent headache.

There are key changes to the insurers’ operating environment requiring the deployment of new strategies in The battle for the insurance value chain. Comprehensive protection is one such strategy.

The historic customer engagement problem

Insurers lament their lack of customer touch-points as interactions are mostly bound by the linear policy lifecycle. Customers know they need insurance but often don’t want to need it - insurers must give them a positive reason to engage.

Deploying a comprehensive protection strategy

Insurers can proactively improve engagement by deploying a truly comprehensive protection strategy (see Graph 1), guarding the customer before and after a loss. Insurers already salve the customer after a loss, in this article we will focus on how they can reduce the probability of a loss in the first place (i.e. pre-loss protection).

Benefits of a well-developed pre-loss protection strategy include:

  • increased customer interaction, brand loyalty and customer stickiness at renewal
  • improved risk selection and the underlying risk
  • reduced price-dominated purchasing decisions and increased product holdings.

Graph 1: Interaction model comparison

Graph 1: Interaction model comparison

Given the plethora of pre-loss protection technology available, this strategy will invariably centre around technology in three important areas.

1. Insurer proposition – technology provided by the insurer to the customer

Customers are more excited by tangibles than intangibles. Successful insurers will recognise that insurance is becoming an ancillary (but necessary) part of the value proposition, superseded by protection technology and wider proposition/membership benefits.

One innovative health and life insurer has done this, gaining the following benefit over their own individual products/propositions:

  • 3.7 times more value from new business
  • 40% less overall UK life claims
  • 81% higher premium size
  • 63% lower lapse rates
  • 60% higher ancillary product sales  [1]

Despite the large investment required and costs involved in building and maintaining customer interactions, it appears this strategy is delivering. The insurer is continuing to recycle the same infrastructure, methodology and strategy for global business units. Further, their UK strategy is now focusing on attracting new business by putting technology at the forefront of their proposition, creating an ongoing dialogue through monitoring and rewarding positive behaviour with relevant and interesting benefits.

A good opportunity for insurers may lie in the connected home sector which is expecting a 33% compound annual revenue growth rate over the next four years [2]. Backing technology that has widespread customer appeal will be extremely important to the success of the overall comprehensive protection strategy.

2. Understand and advise - how the insurer uses technology to understand risk and provide advice

Whilst the pre-loss protection strategy may have one dominant technology drawing the customer into the proposition (generally for less complex needs), the insurers’ work doesn’t stop there, they need the capability to understand the risk and advise on optimal protection measures.

One way property insurers can use technology to understand risk is through drones or aerial imagery which assess the quality of properties over time (see Better View or Cape Analytics). This has the benefit of provi­­­ding unique insight which is likely to create a positive touch-point. Furthermore, insurers must ensure they understand the evolving risk landscape that the modern customer is facing (e.g. cyber risks) and make relevant pre-loss protection recommendations to their customers.

3. Adding value – using customer technology to provide unique insight

Customers are adopting pre-loss protection technology of their own volition (and cost). The RAC found that of 1,000 businesses surveyed, 65% had telemetry devices in their vehicles [3]. Insurers increasingly need the skills and tools to manipulate data in order to provide unique insight to their clients about the most effective ways to prevent a loss. Further, they need to accommodate these proactive measures in their pricing and underwriting approach to ensure a personalised customer experience.

Effective comprehensive protection strategies are:

  • holistic – providing a proposition beyond pure indemnity
  • rewarding – recognising positive behaviours, loyalty and engagement with the brand
  • compelling – providing pre-loss protection technology that has widespread customer appeal.

To ensure the strategy is successful, your business must be prepared in the following ways:

  • finance – building a compelling business case for the comprehensive protection strategy
  • transformation – ensuring the IT estate has the resilience and flexibility to accommodate the strategy
  • marketing – re-framing the proposition; protection first and indemnity second
  • risk management – understanding pre-loss protection technology and the current/future risk landscape
  • analytics –analysing and interrogating customer data.

Whilst there is additional infrastructure spend and maintenance costs associated with these engagements, we believe the revenue upside will outweigh the costs in the medium-term.

Authors: Stuart Riddell and Samuel Church, Financial Services


  1. Discovery Annual Report 2016
  2. Statista (2016) – Smart Home
  3. RAC (2016) – Telematics Takes-off