The Personalisation of Insurance

The personalisation of insurance involves insurers using data and analytics to examine risk and opportunity at ever more granular levels of detail. The insurer then uses this to base the premium, cover and claim around the individual, rather than around a pool of similar people. 

Personalisation is perhaps the most significant trend happening in insurance at the moment. It lies behind much of the 'new thinking' that is driving change in the market. Yet its implications could be profound...

  • the deconstruction of pooling, leading to greater price volatility for consumers 
  • a reduction in the time horizon of insurance from long term to short term
  • new sources of instability are introduced into insurance markets
  • concerns are growing around the interpretation of granular data, especially in relation to protected characteristics 
  • tensions are heightened in relation to fairness, between insurers' emphasis on merit and the regulator's concerns around access and need

Quote 

the most significant trend happening in insurance at the moment

Whatever your opinions are about the personalisation of insurance, the one thing that insurers cannot afford to do is ignore the implications it could have for the market. That's because of the political and social consequences that arise from it. Some say signs of those consequences can already be seen. 

Insurers need to undertake a genuinely independent appraisal of personalisation, so that its business fully understands the risks and opportunities it presents.   

Article | 10 min read

Personalisation - could it take insurance into a digital winter? 

This is a challenging article in which I critique the insurance market's embrace of ever greater levels of personalisation. It draws on many of the questions being raised in academic circles around personalisation, digital and trust.  

Consider this...


Personalisation is always talked about in relation to insurance, and never reinsurance. Would insurers want their treaties to be rated on a personalised basis? If not, then why not?

Conference Panel : CPDP 2017

Is big data driving insurance towards a cliff or a superhighway?

The Lines of Business Most Affected


1.  Life, health and protection insurance

2.  Retail general Insurance

Evidence 

There's been an upswing in questions being asked about the implications of personalisation for consumers, both individually and collectively. These questions are being raised...

  • by consumer groups
  • in political circles
  • by academics

Even some insurance trade bodies are thinking about it. Yet the regulator is keeping quite about their views, for the moment. As further questions are raised, that will change.   

Challenge

Think of insurance as a cake. Traditionally, it was cut into rather large slices of risk. With personalisation, those slices are now getting ever smaller and smaller. Ultimately, the result will be a pile of crumbs. The cake is gone. 

Does a similar fate await insurance?    

Consulting

I advise a number of insurers on the implications that personalisation could have for their business. My role is to introduce perspectives that their people are often not exposed to. In this way, I help them undertake better assessments. 

I'm part of the debate on the future of insurance, speaking at conferences and to in-house seminars and research groups. Through this engagement, I gather ideas and opinions that I share with clients. 

Contact me for an informal chat.

Article | 14 min read

Behavioural Fairness is a serious risk to the future of insurance  

This is a challenging article in which I draw on academic research into the personalisation of insurance. It confronts the commonly accepted view that behavioural fairness is an 'altogether good thing', and instead positions it as a partial response to the questions the sector faces around discrimination.   

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