Fundamental corporate strategy pushes insurers to seek ways of reducing claims and maximising premiums, but as each day passes and we increase the accuracy of models, this approach is resulting in the exclusion of more and more people.
Advances in data, technology and mathematical algorithms enable us to segment people so that we can see which groups will buy, lie or die, which in turn facilitates targeted marketing campaigns and maximised corporate profit.
In an ironic twist this encourages those with an identified greater spending tendency to further spend, but makes it harder for those who really need insurance to buy the cover they need, promoting a culture of exclusion. The power of this exclusion is immense, and we are seeing continued evidence of big business excluding people with long-lasting, negative effect - demonstrated very clearly in these recent BBC headlines:
- Lloyds hit by record £117 million fine over PPI handling
- US hit by ‘massive data breach’
- 68 immigrants found in Harwich International port lorries.
There is a common thread that stitches all of these news stories together, which sees a vulnerable person at the heart of each headline.
- At Lloyds, vulnerable customers were mis-sold payment protection insurance, and then further mishandled in the repair of the damage
- Vulnerable individuals, with data supposedly protected by the US government have been hacked by Chinese cyber pirates
- And finally, the terror and absolute despair of the vulnerable people who risk life and limb to make it to our green and pleasant land
Inclusion not exclusion
I often read about how the use of predictive analytics in segmenting customers focuses on exclusion, but my view is that we can, and should turn this around.
We should begin to think creatively about how we can include these vulnerable groups, identifying those less able to survive or cope and help to make provision for them in our environment. We can use our powerful models to identify them in order to help, rather than targeting them for further rejection and exclusion.
The UK financial regulator has recently asked CEOs to take responsibility for vulnerable customers. This cannot be demonstrated more than with the £117 million fine to Lloyd’s bank.
If you are the leader of an organisation, you have a choice. You can continue to exclude, or you can lead the way and begin to embrace inclusion. Failing that, a fine from a regulator seems to be an unwelcome but effective catalyst to promote change.
"We should begin to think creatively about how we can include these vulnerable groups, identifying those less able to survive or cope and help to make provision for them"