5 reasons why up-to-date customer records are critical for insurers
When it comes to offering insurance, collecting and managing customer data is one of the most important tasks as an insurance companies. This applies to the customer data of today, but certainly also to the data of the past and future. But why is this actually so important? Is it really that bad if some of the customer records are out of date? Spoiler: It is. And I'm happy to explain why!
1. Accurate risk assessment
One of the main reasons is because, as an insurer, you want to be able to make accurate risk assessments. After all, you use this information to assess the likelihood of an insurance claim, or even determine the amount of the costs of certain policies. Inaccurate or incomplete records lead to incorrect risk assessments. And this, in turn, leads to incorrect premiums or unnecessary insurance claims.
2. Comply with laws and regulations.
As an insurer, you must of course comply with strict regulations when it comes to collecting, managing and storing personal data. Consider, for example, the the Fourth and Fifth Anti-Money Laundering Directives (AMLD4 and AMLD5). If your customer records are not in order, you’re at a high risk of fines and penalties imposed by regulators. As previous fines have proven (i.e. £163 million for Deutsche Bank in 2020 and £72 million for Barclays in 2018), they are not cheap.
3. Improved customer experience
A good customer experience is also important for customer loyalty. The more accurately you keep track of everything about your customers, the better you can serve them. After all, answering questions or fulfilling requests would be many times faster and more effective. Which translates to higher customer satisfaction.
4. Fraud prevention
The risks of fraud are only increasing with the emergence of new technologies. You have to deal with fraudsters who deliberately provide incorrect or false information in order to pocket insurance claims. The more reliable and complete your customer records are, the easier it becomes to identify these fraudsters. This will help you avoid financial loss.
5. Improved business performance
Secretly, this is not a reason on its own, but a consequence of the above four reasons. All reasons, and therefore up-to-date customer records, allow you to work more efficiently, cut costs and make better decisions. This puts you in a better position to compete with other insurers. It also makes it easier to discover new business opportunities, especially when you start combining this customer data with external data and performing analysis on it.
We had of course given it away at the beginning of the blog, but up-to-date and complete customer files are of great importance to you as an insurer! But what if you don't know if everything is up to date, or don't know where to start when retroactively updating these records? You will read that… in our next blog.
Can’t wait that long? Send us a message and we'll update you personally!