.png)
"Personalize or perish."
This can be a new motto across all industries. Customers demand more and more, they want to be treated better, and technology allows for it.
The use of Data analytics, AI, machine learning, IoT, RPA, and business rules engines are enabling insurers to adjust to changing market demands, customers needs, and global situations.
How? We'll tell you how business rules engines help with personalizing insurance operations.
Key Takeaways:
- 88% of insurance customers seek more personalized products.
- 80% of consumers are willing to share their data for personalized benefits.
- Personalized services can boost customer retention rates to 81%.
- 71% of consumers expect personalization in their insurance experiences.
- 58% of insurers are increasing their budgets for digital innovations.
The Growing Demand for Personalization in Insurance
Insurance customers now expect the same level of personalization they receive from retail and banking services. Traditional one-size-fits-all insurance products no longer satisfy customer demands.
Insurance companies face mounting pressure from InsurTech startups that offer highly customized products. These new market entrants use advanced technology to deliver personalized experiences, pushing established insurers to modernize their operations.
How Business Rules Engines Enable Insurance Customization
Business rules engines store, manage, and execute business rules that determine policy terms, pricing, and coverage options. When a customer applies for insurance, the BRE processes their information through predefined rules, instantly generating personalized policy options.
Consider an auto insurance scenario: A BRE analyzes multiple data points - driving history, vehicle type, usage patterns, and location - to create a tailored policy. The system applies complex rules to adjust coverage levels and premiums based on specific risk factors. This automation reduces the underwriting process from days to minutes while maintaining accuracy.
Insurance providers implement BREs across various operations:
Underwriting Process Automation
The BRE evaluates application data against underwriting guidelines, determining risk levels and premium rates automatically. This reduces human error in risk assessment and speeds up policy issuance.
Claims Processing Optimization
Rules engines analyze claims data to detect patterns, flag potential fraud, and automate routine claims decisions. This streamlines the claims process while maintaining regulatory compliance.
The implementation of business rules engines in life insurance applications has led to a 42% reduction in cycle time for processing applications, significantly enhancing customer satisfaction. Additionally, this automation has resulted in a 25% decrease in the number of full-time employees required for underwriting tasks, indicating a shift towards more efficient operations.
Real-time Pricing Adjustments
BREs enable dynamic pricing models that respond to changing risk factors and market conditions. Usage-based insurance programs use real-time data to adjust insurance premiums based on actual customer behavior.
Automating Real-Time Decision-Making
Real-time decision-making capabilities set modern BREs apart from traditional insurance systems. These engines process complex rules instantly, enabling immediate responses to customer requests and market changes.
Risk Assessment Automation
BREs evaluate multiple risk factors simultaneously, creating sophisticated risk profiles for each customer. The system processes structured and unstructured data, including:
- Historical claims information
- Credit scores
- Property characteristics
- Behavioral data
- Geographic risk factors
This automated assessment reduces underwriting time while improving accuracy.
Dynamic Pricing Models
Modern BREs support sophisticated pricing strategies that adjust in real-time. Usage-based insurance programs exemplify this capability - as driving behavior changes, the system automatically recalculates premiums. This creates a direct link between customer behavior and insurance costs.
Claims Data Processing
Rules engines transform claims processing through automated decision-making. The system:
- Validates claims against policy terms
- Identifies potential fraud patterns and fraudulent claims
- Routes complex cases to appropriate handlers
- Ensures compliance with regulatory requirements.
Scalability and Efficiency Benefits
About 70% of startups report difficulties in scaling their operations effectively. In insurance, up to 74% still utilize legacy systems for core functions. Scaling existing systems becomes a significant obstacle in growth.
Even with great sales and marketing, the company may struggle with managing customers because of this. 68% of insurers view these outdated technologies as the primary obstacle to digital transformation efforts.
Business rules engines dramatically improve operational efficiency in insurance organizations. These systems handle increasing transaction volumes without proportional cost increases.
The scalability extends beyond transaction volume. Business users can modify rules without IT department involvement, enabling quick responses to market trends and speed up core insurance processes. Multiple teams collaborate effectively as rule changes are centrally managed and consistently applied across all operations. It also helps with adjusting pricing and creating new product, cutting down time-to-market.
Enhancing Customer Experience Through Personalization
Meeting customer expectations and market demands became harder, as people are more aware of the offer and the competition, so they know they can demand more.
71% of consumers express frustration when shopping experiences are impersonal. 86% say that personalization influences their purchasing decisions.
According to Bain & Company, companies that prioritize customer retention are 60% more profitable than those that focus primarily on acquiring new customers. Existing customers typically generate about 65% of a company's revenue, underscoring the importance of retaining them. Repeat customers spend an average of 67% more than new customers, highlighting their value over time.
The probability of selling to an existing customer is between 60-70%, while the likelihood of selling to a new customer ranges from only 5-20%.
Meanwhile, customer retention in the insurance industry averages only 84%, compared to 93-95% in other sectors, underscoring a struggle to meet evolving consumer demands for personalized and transparent services.
Enhancing customer satisfaction is a game-changer in the insurance industry, which has one of the highest customer acquisition costs of all.
Business rules engines revolutionize customer interactions in insurance. The personalization capabilities extend far beyond basic demographic segmentation. Insurance providers now analyze behavioral patterns, preferences, and life events to create truly individualized experiences.
The personalization extends to every customer touchpoint. When customers contact service representatives, the BRE provides instant access to personalized policy information, claim history, and relevant product recommendations. This comprehensive view enables representatives to provide informed, contextual support without lengthy searches through multiple systems.
--------------------------------------------------------------
Source:
- https://www.invoca.com/blog/insurance-marketing-statistics
- https://www.idomoo.com/blog/why-insurers-needs-to-leverage-personalized-marketing/
- https://www.mendix.com/blog/20-stats-future-insurance-depends-customer-experience/
- https://www.celent.com/insights/507144099
- https://krispcall.com/blog/business-scaling/
- https://www.insurancebusinessmag.com/us/news/technology/are-legacy-systems-weighing-down-the-insurance-industry-514574.aspx
- https://www.computerweekly.com/news/450402096/Insurers-face-same-legacy-system-battle-as-retail-banks
- https://www.sender.net/blog/personalization-statistics/
- https://porchgroupmedia.com/blog/69-companies-rate-personalizing-customer-experience-top-priority/
- https://surveysparrow.com/blog/customer-satisfaction-stats/
- https://firework.com/blog/customer-retention-statistics
- https://keywordseverywhere.com/blog/customer-retention-stats
- https://www.edume.com/blog/customer-experience-statistics
- https://ibapplications.com/content-library/blog/the-top-5-challenges-facing-the-insurance-industry-today/
