Brokers who figure out customer segmentation will reap the benefits: HUB International

Brokers who figure out customer segmentation will continue to grow, suggested Gerry De Lauro, SVP, Group & Affinity with HUB International Limited at the Analytics for Insurance Canada conference in Toronto on Tuesday.

De Lauro said during his presentation – titled Maximize the broker-underwriter relationship to share insights on customer segments and discover new business opportunities – that brokers often don’t segment their customers, as they are more focused on their operations. “They struggle with how – the data is there, how do I put it together, how do I distill this?” De Lauro told conference attendees. “Disruption is around the corner, brokers and insurers need to work together to face that disruption.”

He recommended that brokerages take their own data, combine it with insurer data (such as profitability, territories, age of drivers, etc.) and then use pragmatic external data (such as magazines that consumers read and how they consume things) to create a robust segmentation model. “If you put those three things together, plus what the customers are actually telling you, you actually get to this very simple outcome: let’s give customers what they want,” De Lauro said. “If we are going to innovate, it’s because we are looking at things from a customer’s point of view, because we’re segmenting.”

Starting with the customer is key, De Lauro (pictured right) emphasized. Insurance tends to be about things, rather than people, but customers “want it to be about themselves. You drive a car, you own a house, you own a boat, it’s about your thing as opposed to you. They say to me, ‘Well, it’s about me, it’s about my family, it’s about my kids.’ Really what we want to be thinking about is, what does the customer think? We have to listen to the customer and then reverse engineer it.”

Customers also want self-service and De Lauro suggested that brokers should be more aggressive in providing this service. “Because if we don’t, it’s just a matter of time before the disruptor comes in and says, ‘Hey Mr. Customer, do you want to buy today, right on your phone, no questions asked?’”

There is a need to change access points, such as changing an address, De Lauro added. “This, I think, is going to be a very big point of contention for our industry as we go further: how much access do we want to give the customer?”

De Lauro said during his presentation that brokers also have to find a way to work with insurers to attract younger customers, “because at the end of the day, they’re the ones who are going to go to the Googles.” That being said, there has been a lot more collaboration between brokers and insurers when it comes to the digital and social realms. “Who’d have thought even ten years ago that looking at people’s social networks would have an impact on predicting fraud on the claims side?” he asked.

From a modelling standpoint, is there a way to look at it from a customer’s point of view? De Lauro asked. “Is there someone out there who can build a model that says, ‘Here is the model for a 25-year-old single male. What does that look like? What are the data points you need to build that model?”

Still, despite the challenges associated with customer segmentation, it does look like it is starting to take hold. “If you sit down with insurers and say, ‘Can we try to build out something, say for mature adults,’ insurers are willing to have those conversations,” De Lauro said. “Everything should end and start with the customer, because if it doesn’t, long-term, we are going to run into trouble.”