Home and motor insurers face an estimated £100 million bill from not being able to contact historic customers after new data protection rules come into effect next year, analysis from insurance market experts Consumer Intelligence shows.
The introduction of the General Data Protection Regulation on May 25th 2018 means insurers need explicit permission from customers to store their information or face fines of up to 4% of global turnover, or £16.5 million.
Insurers who do not act now to secure permission risk being unable to resolicit either existing customers or recent leavers relatively cheaply, and will be forced to invest in more expensive sales from price comparison websites – landing them with a collective bill of more than £100 million a year, Consumer Intelligence warns.
Its consumer research shows just one in three (32%) of drivers would give permission to store their data meaning insurers face having to delete millions of customer records. Analysis of Consumer Intelligence’s exclusive switching data for the leading home and motor insurance companies estimates some generate up to 30% of business through old customers returning to the brand which will not be possible under GDPR.
To maintain the same numbers of customers they will need to use price comparison websites where leads can cost £45 a time. The biggest impact will be felt by bigger brands with long-established customer bases, while new entrants and smaller brands which already rely on price comparison websites could benefit from a more level playing field.
Ian Hughes, Chief Executive of Consumer Intelligence said: “Insurers who do not act quickly will have to pay out more in the future.
“Currently the vast majority of insurers are not compliant with the new regulations and the industry needs a serious rethink in the way it engages with customers.
“The good news, however, is that those who do act will have a substantial competitive advantage and can turn a major threat to their business into a tremendous opportunity.”
Firms which focus on loyalty and reward customers will benefit as customers will be more willing to give permission to store their data. Worryingly, just 28% of insurance customers feel their insurer rewards them for their loyalty.
Advice on preparing for GDPR includes starting to test opt-in messages with customers now, and asking permission to stay in touch with lapsed customers.
Companies planning for GDPR should also widen the staff involved to include customer-facing employees, instead of focusing on compliance and data storage issues.
Data is the lifeblood of the modern insurance industry. It influences everything from pricing to claims, and insurers are constantly searching for the right data on the right customers. Without data, the insurance industry just ceases to operate...
Notes to Editors
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About Consumer Intelligence
Consumer Intelligence conducts consumer surveys and benchmarks price and service performance providing unique insights into competitor pricing and customer experiences, their attitudes, opinions and behaviours. For more information, visit the web site www.consumerintelligence.com