Consumers expect benefits from handing over their personal data
Collecting personal customer data is critical for improving insurer and insurtech products and providing efficiency throughout the customer value chain. Studies demonstrate that consumer willingness to share data depends on the benefits they receive.
“Consumers are increasingly aware that their personal data has value,” says Dr. Robert Hartwig, University of South Carolina’s Director of the Center for Risk and Uncertainty Management and Clinical Associate Professor at the finance department. ”Many are willing to allow third parties to collect and monetise that data, if they perceive a benefit to them,” he adds.
Sören Kruse, Head of Business Acquisition & Development at Hannover Re in Johannesburg, South Africa, describes what this can mean in concrete terms. For several years, bonus programmes have been established that “do not focus on the insurance policy, but on the customer's needs,” he says. “Crucially, customers get real value when they share data about their behaviour – for example, 25% off healthy food or 75% off gym fees.” Billing is automated, so it doesn't create any hassle for insureds. “The programmes help participants live healthier lives and allow insurers to share savings directly with their customers, thanks to improved loss ratios and lower lapse rates.”
Two global surveys reveal that insurance premium reduction is a main benefit that increases customers’ willingness to share personal data. According to the Accenture report “Guide insurance customers to safety and well-being: What consumers want in personal digital marketplaces” (Kenneth Saldanha, Todd Staehle) published in January 2021, about seven out of 10 consumers (69%) worldwide said they would share important data on their health, exercise and driving habits in exchange for lower prices. The figure represents a 19% increase from two years earlier, noted the report, which is based on 47,810 survey respondents across 28 global markets.
Data sharing via devices and social media
A survey by Capco entitled “The Future of Insurance: Personalized, Digitalized & Connected” (Harriet Webster, Tim Steele), concluded that 72% of customers are willing to share personal data to enjoy a discount on insurance premiums. Released in July 2021, the survey queried 14,000 consumers in 13 markets. Men tend to be more willing to share some data (75%) than women (68%).
- 32% would allow a smart device in their homes
- 20% would share their social media data
- 19% would accept a black box (telematics) in their vehicle
- 28%, however, were characterised as “none of the above”
In South Africa, wearables with which customers share their data, such as daily values regarding fitness status, sleep patterns and heart health, have become established in combination with insurance products, reports Sören Kruse. If health values improve, the sum insured increases without a premium adjustment. “Customers also see this as real added value: The philosophy with all collected data must be that the end customer benefits in each case.”
However, the desire for greater technological connection and willingness to share information also depends on the country of origin. According to the Capco study, most policyholders in Hong Kong (92%) would share their data to get a more personalised product or premium. German consumers, however, were more divided about insurance-related digital experiences, as 40% want a better insurance experience online, 40% do not and 20% are unsure. One-third of German respondents (34%) would not share any form of personal data.
Humans or chatbots? Freedom to choose
Even though consumers are increasingly interacting in the digital world, especially during Covid-19, that does not mean they want every phase in the customer journey digitalised. According to the Accenture study, consumers still view human touchpoints as more trustworthy when in need than digital touchpoints. “Insurance can be an emotionally complex business for consumers – they need the freedom to choose methods of interaction most comfortable for them,” Accenture advises.
And though surveys often show younger people tend to be more willing to share data than older people, that is not always the case. According to a survey of 1,001 drivers in the United States, 60% of Gen Zers (age 18 to 24) said they feel some level of discomfort with sharing location data and 45% feel uncomfortable sharing driving information. The results are posted on The Zebra, a website offering car insurance.
Furthermore, according to the website’s blog, 40% of older millennials (age 35-44) and 36% of Gen Xers (age 45 to 54) are not comfortable sharing driving data, and more than half in both groups are not comfortable sharing location data with auto insurance companies.
Incentivising customers is not enough
Multiple studies show that consumers vary in terms of their willingness to share personal data and of their interest in more digitalised consumer experiences. Incentivising customers with these approaches is not enough. According to the Accenture study, insurtech and insurance companies also need to restore trust through digital and human interaction. In times when cyberattacks are putting personal data at risk, that will mean demonstrating respect for and protection of personal data.