Insurance industry

trends and solutions

for data challenges
 Insurance leaders are facing aggressive business demands
The industry incumbents are facing formidable challenges across various dimensions—in essence
creating a perfect storm.
1. Customer purchase preferences are changing: Consumers expect better customer
experiences at every touchpoint, especially via digital platforms. This requires insurers to
Introduction build rapid and smooth onboarding and remove unnecessary interaction barriers throughout
Even though insurance companies traditionally relied on data for key business the customer journey. As customers purchase new policies, add additional coverage, or file
claims, they expect to navigate through every stage of that process quickly and smoothly,
decisions, they are facing compounded data challenges that hinder customer
using digital self-service tools to monitor their own progress. Millennials and other digital
experience and ultimately impact profitability. Customer interaction preferences natives—an increasingly larger pool of prospective customers—are raising the bar by expecting
and service expectations are changing. Their loyalty is fleeting, as new digital- personalized and frictionless digital experiences.
native competitors emerge and put pressure on the operating models of traditional
2. Customer loyalty depends on innovative product offerings: Although many customers
insurers. To succeed and grow in this new era, insurance companies need to remain loyal to the insurer, some do not—even if they have a long history with them. According
make major shifts and rapidly bring new capabilities to the market. Both digital to an Accenture analysis, customer retention rates hover around 85% for most insurers.
technology and data management practices are central to this transformation. But customers are switching providers to get the products they want. The new generation
of consumers demands new product offerings and bundles that factor in their lifestyle and
related needs. These include usage-based insurance that maps to their specific lifestyle
or policies that are priced for their individual risk rather than on a generalized pool-based
“Insurers are faced with having to rethink product design to fit new lifestyle representation of likely risk.
and unmet consumer needs, transform customer engagement, empower Even the needs of the business insurance customer are changing. Many of today’s Fortune
stronger ecosystems, and build new value propositions to drive greater 1000 companies are not dependent on physical assets such as manufacturing plants,
customer outcomes.” inventories, and other tangible assets for their market value. Their balance sheets are heavily
skewed towards traditionally uninsurable intangible assets—intellectual property, data, brand,
Source: Gartner® 2022 CIO and Technology Executive Agenda: An Insurance Perspective,
and reputation. These businesses are instead looking for insurers that can provide the entire
Kimberly Harris-Ferrante, November 10, 2021
portfolio, including cyber insurance or IP insurance to support their evolving needs.
3. Classic operating models are increasingly under pressure: The industry is facing
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.
unprecedented pricing pressure, driven by fee transparency, digitally-savvy competitors, and
lower-cost options. Figure 2, for example, highlights where the insurtechs are disrupting the
industry value chain. As a result, revenue growth and profits are facing significant headwinds.
In response, insurers need to make significant changes to their operating models to reduce
their costs and bring agility into their product development and introduction processes. They
need to expand current distribution channels and build omnichannel experiences for fast,
reliable responses during the few moments of truth, such as in sales and claims.

2 Insurance Industry Trends and Solutions for Data Challenges

To keep and grow customers, some traditional insurers are increasing investment in direct online 4. Data protection and privacy concerns: Cybersecurity and data privacy are prominent
sales, while hedging their bets by supporting agents and brokers in a variety of ways—from concerns not only because of increasing regulatory pressure, but also to build trust with
prospecting to sales management. consumers. Due to rapid increase in data volume through sensors, third-party aggregators,
and other alternative sources, data protection and privacy management is more complex.
According to Deloitte Research, 70 percent of those surveyed expect to boost spending on
data privacy in 2022.
5. Race for intelligent operations: Insurance companies need to increase digitalization to retain
customers and keep up with competitors. Not only will it enhance the customer experience
at the front end, but automation, data science, and analytics will drive productivity gains
and improve operational performance at the back end. These investments in back-end
operations will drive straight-through processing, “next best action” recommendations, rapid
risk assessments, dynamic pricing, and more. Insurtech companies excel at using modern
technologies effectively even as incumbents rush to invest in similar solutions and face
significant challenges due to working with legacy systems.

Figure 2: Where insurtechs are investing along the value chain.

Source: Accenture report ‘Innovate for resilience and new insurance revenue’

4 Insurance Industry Trends and Solutions for Data Challenges

How insurance companies address these issues 1. Drive growth
In the face of these disruptive changes, carriers need to deliver new value propositions to acquire a. Omnichannel engagement: Customers demand great service. They engage with you via a
and retain customers. Based on our analysis of how our insurance industry customers are channel based on their convenience and preference. By providing them an amazing brand
using our technology to compete effectively and grow the business, here are the nine business experience across any channel through which they engage, you can increase retention, loyalty,
initiatives insurers invest in (Figure 3). and wallet share.

“Consumers are more digital than ever, expecting omnichannel interactions

and faster transaction processing.”
Source: Gartner® 2022 CIO and Technology Executive Agenda: An Insurance Perspective

b. Customer centricity and targeted marketing: Service expectations of customers have

changed, influenced by the engaging experiences from e-commerce sites they visit and
the apps they interact with every day. To meet their expectations, you need to understand
their end-to-end journeys across all touchpoints, as well as their recent life events, so you
can present them with personalized offers and opportunities, including “next best offers” to
increase upsell and cross-sell.
c. Value-based agent/broker management: The foundation of your growth depends on the
relationships you have with your brokers and agents. The broker segment has lately been
consolidating due to M&A, putting pressure on you to retain your best-performing brokers. As
a result, you need to provide brokers with the information they need to help them grow their
customer relationships—and their businesses—as well as making it easier for them to work
with you.

Figure 3: Key initiatives insurers are investing in to address the consumer trends and challenges
Source: Reltio internal analysis

6 Insurance Industry Trends and Solutions for Data Challenges

2. Reduce costs via operational efficiency and 3. Simplify risk management and compliance
process optimization a. Reduce risk via improved fraud detection: You can
a. Digital self-service: A digital self-service channel minimize fraud by knowing your customers, their
can significantly reduce your costs while providing history, buying behaviors, and even social media
your customers with faster and seamless quoting, interactions—and then instantly fueling your risk and
policy management, and claims settlement. Without fraud management analytical apps with such rich
a quality digital self-service experience, your data. These capabilities are essential to reducing
customers may switch to a more expensive channel losses, while ensuring you can respond to customer
such as a call center. Or, worse yet, to another insurer claims in a timely manner to increase loyalty.
with a better digital experience.
b. Evidence-based loss prevention: With evidence-
b. Intelligent automated claims and policy based loss prevention services, you can help your
management: Innovative carriers are leveraging customers identify and take preventative measures
AI-based technologies to enable underwriters to to lower their risk of property losses and reduce your
make faster and more informed decisions, including claims leakage. Using telematics data, for example,
assessing individual risk for pricing personalized you can proactively show customers that their
policies. These technologies also speed the claims driving habits increase the risk of collision. But to
settlement process, while reducing fraud through offer these value-added services, you would need to
real-time detection, and recommending the “next build capabilities to leverage sensors and other data
best process step” for new employees. In a race to sources in low latency within your decision support
retain existing customers and acquire new ones cost systems.
efficiently, building these capabilities is essential.
c. Simplify compliance with privacy and financial
c. Partner ecosystem collaboration: You can cater to regulations: Trust is the foundation of your
new market needs by collaborating with partners business. It also applies to how you protect
such as car manufacturers, repair shops, legal firms, customers’ data. To earn customer trust and loyalty
assessors, and even insurtechs. This will allow you to while avoiding regulatory sanctions, you want to
quickly bring innovative and differentiated products ensure that your business communicates with your
and services to market, enabling you to grow customers based on their privacy and consent
existing customers and acquire new ones from the preferences. In addition, building detailed customer
competition. profiles for KYC and other financial regulations are
essential.

8 Insurance Industry Trends and Solutions for Data Challenges

 Leading industry analysts validate the capabilities that customers need to develop to address the
unprecedented challenges in the industry. Gartner in their report Four Key Capabilities for Insurers,
2022 and Beyond has identified fundamental capabilities that insurance CIOs must embrace, as
shown in figure 5.

A survey of 100 technology leaders from insurance companies across the U.S. and Canada by
World Business Research (WBR) Insights asked the respondents to pick their top two goals for
enhancing the customer experience and improving the operational efficiency. The results below
are shown in Figure 4 and align well with our analysis of the key initiatives that our insurance
industry customers are successfully implementing using our platform.

Of the options below, what are two of your top goals for Of the options below, what are two of your top goals to improve
improving the customer experience in the next 12 months? operational efficiency in the next 12 months?
Offer a personalized, contextual experience on every channel (e.g., web, call center, mobile, brokers) Enable intelligent automation for personalized marketing
44% 36%

Gain visibility into the end-to-end customer journey, starting with the prospect stage Increase self-service options for policy changes, first notice of loss, claim status, & others
37% 32%
Improve self-service for policy changes, first notice of loss, claim status, and others Enable intelligent automation for claims processing
35% 32%
Launch new services, such as usage-based insurance, ability to select policy pricing, and others Accelerate partner integration to extend the product portfolio with joint offerings
32% 20%
Build trust with reliable data privacy and consent management Enable intelligent automation for fraud detection
26% 19% Figure 5: Capabilities that insurers CIOs need to develop
Simplify and streamline the customer onboarding process and data collection touchpoints Enable intelligent automation for policy underwriting Source Gartner “Predicts 2022: Insurance — Advancing Digital Maturity Will Enable New Ways to Differentiate,” Richard Natale,
26% 17% Kimberly Harris-Ferrante, et al., November 20211
Enable intelligent automation for customer onboarding
16%
Enable intelligent automation for policy management
15%
Collect third-party data to enrich internal data for more accurate risk assessments
13%

Figure 4: WBR CIO Megatrends Survey Responses

Source: Insurance CIO Mega Trends - Building Effective Digital Strategies in a Transforming Insurance Market

10 Insurance Industry Trends and Solutions for Data Challenges

Your current data management technologies may be a roadblock Bringing together customer, policy, broker, claims, and other information from numerous
disparate, disconnected systems into a consistent and consolidated view is not a trivial task. This
As you embark on your initiatives to build the above capabilities, the first challenge you are most is especially true when your critical policy and claim data is locked in legacy systems. In many
likely to run into is the quality of your data. According to WBR Insight’s research on the insurance cases, multiple systems support the same function—all in silos—with manually-coded, point-to-
industry, increasing data complexity is among the top two challenges facing insurers. Application point integrations between them. This problem is made even worse from M&A activity. As a result,
proliferation and increase in data silos is also highlighted among the first four issues in this recent you may be using inaccurate and incomplete data in your business processes, leading to errors,
survey (Figure 6). inefficiencies, and customer frustration.
Without the ability to bring together a comprehensive and accurate customer view, you cannot
easily provide visibility into all the policies that a household owns, generate multi-policy discounts,
or execute personalized marketing campaigns for “next best offers.” More examples of how data
quality creates poor customer experiences are shown in Figures 6 and 7. Without a single view of
your customer, it is also challenging to deliver on your omnichannel or digital experience efforts.
Aberdeen, in a recent analysis, said, that “If you don’t currently have unified views of customer
data, we highly recommend that you consider building the capabilities needed to help align your
activities with those of the best-in-class firms that enjoy superior performance results.” Their
analysis of the financial services industry found that firms with a seamless customer master data
management program consistently showed higher YoY improvements in key benchmarks over
firms without a seamless customer master data management program.

Figure 6: Top technology challenges facing the insurance industry

Source: Insurance CIO Mega Trends - Building Effective Digital Strategies in a Transforming Insurance Market, 2022

Figure 7: Results of Aberdeen survey for financial services companies

12 Insurance Industry Trends and Solutions for Data Challenges
Inaccurate, outdated, or incomplete data—coupled with use of older technologies—wreaks havoc
on your business processes and gets in the way of achieving your digital transformation initiatives.
Here are a few examples:
• You cannot identify your customers across channels and see all their relationships with you,
making it challenging to make personalized offers
• You cannot see a customer’s full journey and assess their lifetime value so you miss
opportunities to serve them and their households with innovative products and relevant offers Do You Know Your Do You Have Contextual and Can You Provide Next Best
for their life events Customer? Relationship Information? Offers?

• You cannot rapidly expand your product offerings through ecosystem partnerships due to Manual data entry and silos Wrong identity and incomplete Lacking a true view into
difficulty integrating with their systems lead to inaccurate, incomplete data prevents customer view customers leads to missed
information. You cannot and tracking. You cannot see opportunities to cross-sell and
• Your customers experience delays in processing claims recognize them. their full journey and value. hinders profitable growth.
• You cannot harness the full power of ML/AI-based systems for real-time risk assessments for
underwriting new policies or processing new claim requests
• Data privacy compliance is difficult, leading to potential fines and loss of customer trust,
because consent permissions captured independently in various systems are not shared
across the enterprise • Is customer Bob J. Smith • Do you know Bob has a • Can you send Bob a
the same person as Robert teenager who will drive discounted car policy before
• Building a detailed customer profile for KYC to support fraud prevention and comply with Smith? soon? he shops somewhere else?
various financial regulations is challenging
• Do you know Bob has three • Can you see who else in his • Can you notice when he asks
policies and no claims? household has a policy with for a new quote?
you?
• What other relationships do • How do your campaigns
you have with Bob? • Can you do lifetime value perform with your target list?
analysis?

14 Insurance Industry Trends and Solutions for Data Challenges

Lack of unified view of customers, their households, policies, and claims negatively impacts
the customer experience. Here is a possible scenario when customer operations are run with
fragmented, poor-quality data:

MDM solutions have evolved significantly since the early 2000s. Next-generation MDM systems
leverage modern UI and architecture capabilities including cloud, ML, low-code integration, and
Figure 8: Example of problems caused by inconsistent and inaccurate data across systems, leading to poor customer experience graph database, among others. Cloud-native SaaS MDM solutions are scalable, agile, and reduce
the cost of ownership. Customers always run the current version with zero disruption—there
is no need for additional budget for upgrades. Modern MDM offerings also enrich the master
Next generation master data management (MDM) technologies can address these data issues, record with third-party data (such as demographic data) to add context. If they are using graph
making it easier for you to implement transformational initiatives within your organization. technology, they can provide multilevel hierarchy and relationship management.

Address these data quality issues using next generation MDM platform
Most insurers today operate multiple systems to manage their operations and customer In a survey of 100 technology leaders from insurance companies across the
interactions. This leads to data silos, duplicated data, incomplete data—delivering a disjointed view U.S. and Canada by World Business Research (WBR) Insights, nearly half of
of the business. An MDM system brings in the master data (such as a customer, policy, or claim) respondents (43%) agreed that data management—including integration,
from each of these different systems. It then combines, cleanses, and standardizes these records
quality, and MDM—will be among the most important technologies to their
to create a unified trusted record. This trusted, insight-ready data is then available to operational
and analytics systems. digital transformations over the next 3 years.

16 Insurance Industry Trends and Solutions for Data Challenges

Our Approach To address the data quality issues mentioned in the earlier section and support your digital
transformation initiatives, our platform offers several key capabilities.
Our mission is to accelerate the value of your data. We bring your data together, however complex
your environment may be, to create a trusted data foundation—a single source of truth. With a Fueling operational and analytics systems with timely, trusted, insight-ready data:
constant supply of unified, cleansed, enriched, and comprehensive data from the • Unifies and cleanses customers, agent, policy, and claims data in real time across operational
Reltio Connected Data Platform (Figure 8), you have a much clearer picture of your customers and systems, decision support, and cognitive systems
operations—and greater ability to successfully implement your transformation initiatives.
• Provides out-of-the-box data model and configurations for the insurance industry
• Automatically builds households based on your definition
• Cleanses, standardizes, and deduplicates data using AI-based matching or user-definable
matching rules
• Creates a data abstraction layer for legacy systems and shares the data with other operational
and analytics systems
• Combines first-party data with third-party data for richer, actionable insights
• Continuously validates, curates data, and visualizes data quality metrics for proactive data
quality management
• Discovers and graphically visualizes relationships and hierarchies among people (households),
policies, claims, and locations
Driving agility and fast time to value for today’s real-time business:
• Offers insurance-specific data models and configurations along with automated householding
capabilities to reduce your implementation time
Figure 9: Our platform enables unified, cleansed, enriched, and comprehensive data across the enterprise • Provides an intuitive, self-service user interface for your business teams
• Leverages low-code/no-code development environment with over 1,000 prebuilt connectors
The Reltio for Insurance solution provides an out-of-the-box data model and configurations for to enable integration within hours or days
the insurance industry and automated householding capabilities to reduce implementation times • Uses feature-rich APIs for real-time and batch integration
for insurance use cases.
• Connects with external sources such as credit history, sensor and monitoring data,
demographics, and sanctioned-party listings for data enrichment
• Adapts rapidly to your business needs with a flexible data model

18 Insurance Industry Trends and Solutions for Data Challenges

Delivers enterprise-grade security, scalability, agility, and high-availability with zero effort: Value Examples for Insurance Companies
• Deploys as a cloud-native SaaS offering with subscription pricing on all major cloud platforms:
Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP)
• Provides out-of-the-box comprehensive security and access permissions, 24/7 security
monitoring and threat protection, and encryption support for data in motion and at rest to keep
your data secure >$1M 60%
• Manages billions of customer profiles, thousands of profile attributes, and easily scales as your
Estimated upfront Increase in first-call
business needs change
TCO savings resolution
• Includes high-availability and disaster recovery features as part of the service without requiring
extra effort or cost
• Offers Financial Services Cloud, a purpose-built offering for financial institutions to operate
with an extra layer of security on top of our already-strong security
Leading insurance carriers such as American Family Insurance, Empire Life, Mercury Insurance,
CSAA, and many others are successfully implementing transformational capabilities using our
solution.
40% 20%
Projected growth in Improvement in
prospects due to new data quality
Empire Life, one of the top ten life insurance companies in Canada, can now data sources scores
tap into the full power of their data to deliver a better customer experience.
Their customers can now do anything they need to do online using trusted,
connected data without facing data quality related issues.
Figure 11: A few examples of value achieved by our customers
And customer service representatives can be more responsive with customer
data at their fingertips, allowing them to better triage and resolve customer
Our core focus is to help you gain more value from your data, more easily. We believe that
problems. Access to accurate, timely data has increased their first-call high-quality data is the essential ingredient in transforming your operations and driving positive
resolution rate significantly over what it had been using their legacy MDM business outcomes. It is vital to enabling a seamless customer experience that accelerates
software. So, this is a double win—happier customers and a more productive growth. It improves efficiency and drives operational cost savings. And it simplifies risk
customer service team. management and compliance to reduce your potential losses and regulatory fines. We build a
single source of trusted data, so you can focus on making the right decisions, instead of worrying
about getting the right data.

20 Insurance Industry Trends and Solutions for Data Challenges

 WHY RELTIO
We believe data should fuel your success, not hold you back. Our first-of-its-kind, master data
management SaaS offering unifies and cleanses multisource, complex core data into a single
source of trusted information—in real time. Agile to fit any company’s needs and flexes at will.
Reltio Connected Data Platform helps you act on your data with confidence. And maximize
your impact every day.

To learn more, visit www.reltio.com

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Your industry is facing unprecedented challenges. Your digital transformation initiatives can @Reltio
address those headwinds—but it is not easy. Especially if your core data is trapped in outdated
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legacy systems. You require timely, accurate, insight-ready data—available when you need it.
Integrate and unify your myriad data sources and applications into a consistent and consolidated linkedin.com/company/reltio-inc
view of customers, policies, brokers, claims, and more. So you can be a more customer-centric,
agile, and profitable business.
Our first-of-its-kind, cloud-native SaaS MDM, Reltio Connected Data Platform creates a unified
and trusted view of data across the enterprise. It removes the roadblocks for driving critical
initiatives by enabling personalized customer engagement, intelligent operational processes,
simplified regulatory compliance, smart broker management, and compelling new products. We
put the full power of data in your hands, so you can maximize your impact every day.

22 Insurance Industry Trends and Solutions for Data Challenges