Policygenius is a US based online insurance marketplace, and their annual survey of consumer sentiment is timely. There’s a lot of talk in the sector at the moment about innovating to prevent losses rather than just paying out on them, and about usage based insurance (UBI) being the future of the sector.
The problem is that there has been too little attention paid to what consumers think about all this. The sector has become stuck in its thinking, that because something is a good idea and that consumers should benefit from it, then consumers will be sure to like it, perhaps even pay for it. The problem however is that while there are strengths in that argument, firms have failed to weigh up its accompanying weaknesses.
The Policygenius survey highlights a key weakness in many insurer’s take on UBI and ecosystems of prevention. It is that consumers, even in the US, value their privacy as well. And many of those consumers are viewing these data sharing devices as intrusions designed more to harvest their data than to benefit them through services and discounts. This is exactly the point I made in this article back in May 2020.
Insurers working on UBI and prevention tracking innovations need to rethink the way in which they have accounted for consumers’ concerns about what data is gathered and how that data is used. At the same time, it is important that they unbundle ‘privacy’ into its different elements, as well as make sure that it’s not just seen as an ‘are we compliant or not’ issue. It’s much more fluid and complex than most insurers and their advisers make out.
What Consumers Don’t Want
So what were the key points that Policygenius’s survey found? Here are the top four…
- 68% of Americans would not install an app that collects driving behavior or location data for any insurance discount amount, up from 58% last year.
- 68% of Americans would not install a live dashboard camera for any insurance discount amount.
- 65% of Americans would not install smart-home devices (doorbell cameras, water sensors, thermostats) that collect personal data for any insurance discount amount.
- 77% of Americans would not install a smart doorbell camera that shares facial recognition data with third parties for any insurance discount amount, compared with 67% last year.
Two obvious conclusions can be drawn from these headline numbers. The first is that if two thirds of consumers don’t like such devices, insurers need to think twice before basing their product strategy around them. And the second is why haven't insurers been finding out these opinions for themselves, before making such big investments?
Why Haven’t Insurers Listened?
So why haven’t insurers been picking up these signals? If I can, then they most certainly can. I think two influences are at play here. Firstly, there are a lot of firms selling ‘internet of things’ device based services into the insurance market. The buzz around IoT is huge and it takes a strong minded insurer to pay more attention to what consumers are saying.
The second influence is more complex. You will note in my ‘loss prevention as a trojan horse’ article that I can see insurers ultimately using IoT devices to strengthen their handling of warranties and endorsements. Consumers may not want to trade their data for premium discounts, but they are unlikely to actually be offered those discounts in the first place. Instead, there’s more than a hint here of insurers positioning themselves away from being ‘a loss paying business’ and more towards a ‘loss prevention service’. In other words, there will be less insurance on offer and more devices in its place. The latter will determine if the former is offered. So, devices will become gate keepers to the market for cover.
The Emerging Tragedy
The emerging tragedy for insurance is that many insurers have based their digital strategy upon the premise of proximity. In other words, ‘what data can we get that takes us closer and closer to the consumer?’ Not surprisingly, this heightens consumers’ feelings of uncertainty and vulnerability.
A few insurers have gone the other way and based their digital strategy upon the premise of intimacy. In other words, ‘what can we do to make the consumer want to come closer and closer to us?’ The difference of course is trust.
If the Policygenius survey is truly reflective of consumer sentiment on this issue, and I believe it is, then the sector needs to weigh up the implications it has for the investments of time and money they’ve put into digital strategies premised upon data harvesting devices. They need to think carefully about their partnerships, this time with a more critical and independent eye.
Some will of course question just how reliable the Policygenius survey is, and whether it reflects the concerns of UK or European consumers. It’s a valid question best answered with the survey published in 2020 by the Association of British Insurers, into consumer attitudes to insurance and data. What the ABI found was that consumers here in the UK view ‘insurers and data’ through a “double lens of mistrust”. To quote from the report…
“…consumers are primed to feel particularly cautious and sceptical when it comes to their data in the context of insurance (or vice versa). It also means that they are more likely to interpret new developments in relation to their data as designed to work in the industry’s best interests (for example as a means of increasing prices and profits) rather than their own.”
That’s painful reading for many insurers, and why I felt the term ‘the emerging tragedy’ was apt for the above part of this article.
Looking Ahead
I would be more than surprised if insurers who have adopted the proximity style of digital strategy were to change course overnight. What I would recommend they do however is to really scale up their radar on consumer sentiment around the gathering and use of data, in order to learn the scope and depth of the gap between what they are doing and what consumers want. And by ‘what consumers want’, I mean what consumers say for themselves about their concerns and hopes, not what people say consumers are saying. Listen to the source and learn from them.
I should end with an important caveat to how insurers go about scaling up their radar on consumer sentiment. There’s a risk in how that engagement is designed. All too often, such engagement ends up seeking the answers from consumers that the firm wants them to give. For example, ‘would you like to get a discount by doing this’ doesn’t identify whether the consumer actually wants to do ‘this’. I use an ethical dialogue assessment tool for judging just how much an engagement is actually about listening. After all, listening is the most important of all ethical skills.
