IBM's Danny Lee says insurers have a lot to learn from the online retail sector when it comes to capitalising on customer data

Insurance firms not rising to 'big data' challenge

Insurance firms in the UK are failing to make the most of customer data they hold, a survey by IBM has shown.

The study found that 84 per cent of the 50 senior IT decision makers within UK insurance companies questioned said their company does not integrate customer data into a single database.

Danny Lee, from IBM Software Group, said a failure to integrate data and create a ‘single view’ of each customer is a major issue in an industry where personalisation of services is becoming increasingly important as insurance providers look to target the marketing of their various insurance products more effectively.

“If insurance organisations can’t have seamless organisation across different communication channels that creates some customer service issues,” he said.

“Fifty-four per cent of companies have six or more separate IT systems within their organisations and they are also storing records in multiple systems, which really means they are going to have difficulty getting a single source of truth and a 360-degree view of customers.”

The survey, carried out by Vanson Bourne for IBM, found that only 16 per cent of organisations integrate customer data across their IT systems into one central database.For 38 per cent there was no integration at all, with each line of business or broker operating their own database.

Data generated by quote engines across various sales channels, such as call centres, websites or mobile apps, was only totally integrated and accessible at 24 per cent of organisations.

And only 4 per cent of companies said they capture and retain 100 per cent of customer data based on their transactions with them – on average, companies captured and retained 64 per cent of customer data.

The findings will worry chief marketing officers (CMOs) at insurance firms, as IBM’s 2011 CMO survey found that 43 per cent claimed lack of data integration is the main barrier to using technology to improve their marketing efforts.

“The customers are demanding that companies really know them personally and it’s very much driven by the retail organisations,” said Lee, who has a background in sales and marketing for the insurance industry.

“I think we have a lot to learn from the retail organisations, especially the ones driving online retail. I actually had senior executives from insurance organisations say their inspiration is to be similar to”

The survey found that 57 per cent of insurance companies claiming to use basic databases and spreadsheets to collect, manage and analyse customer data felt they were performing poorly at winning or retaining customers.

This compares with only 8 per cent of those using business analytical tools for the same purpose who felt the same way. Almost nine out of ten (88 per cent) expressed concern at how a lack of customer data integration could affect sales.

The companies using business analytical tools claimed to be able to collect 76 per cent of data generated during customer transactions; while those using basic databases and spreadsheets could only collect 57 per cent of it.

“The tools are very robust, it’s not a matter of technology,” said Lee. “The IT and marketing teams have to be the glue and enabler to a consistent customer experience by looking at their customer holistically across line of business.”

When asked about their IT priorities for 2013, the companies rated streamlining processes as the most important (88 per cent rated this as important to very important), even above meeting regulatory requirements (66 per cent), data security (64 per cent) or cost savings (62 per cent).

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