Tag Archives: data asymmetry

Competing in an Age of Data Symmetry (Pt. 3)

The Internet is a mirror of sorts — a data mirror. Right now, it is a sort of fuzzy data mirror, but the pictures grow clearer as the available data grows. Soon, the image of an insurers’ customer service, pricing and claims experiences will grow crisp. How will it happen? How will insurers respond and remain competitive?

In Part 1 and Part 2 of our series, we discussed data symmetry — the leveling of the playing field that is currently happening because insurers are gaining access to many of the same streams of data. The trend runs in contrast to data asymmetry, which allowed insurers to comfortably differentiate themselves by being good at the analysis of their own in-house data. As insurers use more and more of the same data and some of the same analytics tools and methodologies, they will find themselves in a pool of sameness. Differentiation by price and service will be less about introspective analysis and more about finding and delivering on real brand promises.

So, in today’s blog we are crossing a bridge of sorts. We are going to look at how the consumer will achieve data symmetry by gaining a clear view of the real insurer.

See also: Data Science: Methods Matter

Changes in scrutiny are causing data symmetry

Insurers are the subjects of constant scrutiny. The NAIC, the Federal Insurance Office, the Department of Labor, every state and every consumer protection organization have an interest in watching insurers. Yet all of that scrutiny may pale in comparison to the impact of the coming wave of individual consumer scrutiny.

Consumers are using ratings, stars, comments and shopping patterns to give instant feedback to all service providers. Feedback (real experience) is a sales tool for aggregators and retailers. It is a reason for consumers to choose particular channels or pipelines. Amazon and eBay don’t have to build trust for any one product. They only have to facilitate feedback and let the products, services and suppliers speak for themselves.

These outside views are the result of symmetrical data availability. Prospects are now able to compare any product or service, including insurance, with greater real data, including both sources that are verifiable and those that contain unstructured data. Consumers may look at an insurer through the lens of an insurance aggregator, such as Insure.com or The Zebra, or through simple search terms such as “worst auto claims experience in my entire life.” They may also witness an insurance interaction through their relationships with friends on social media.

Reputation analysis will hold tremendous power to validate or invalidate brand promises. Does the insurer make it simple to file a claim? Does it have a poor track record in paying claims? Are renewal rates much higher or lower than competitors’? These bits of information weren’t as public in the past. Today, they are common and easy to find.

See also: What Comes After Big Data?

Data symmetry’s effect on the insurer will operate much like a looking glass. The insurer will begin to see itself, not as it has attempted to portray its brand, but as it is perceived during real interactions. This will lead some insurers to make course corrections.

The good news is that data symmetry will supply healthy doses of reality. Insurers will know and understand their competition. They will have an unprecedented, timely idea about what customers really want and how well they are supplying it. If they are prepared for the coming levels of data symmetry, insurers will also be able to make agile shifts and meaningful steps toward selling insurance through many different channels. Many of these details are still food for our insurance visions. One thing is certain, however. Data and analytics will continue to unlock the secrets of market positioning to keep insurers competitive. Data’s relevance to business decisions will always grow.

The Last Analog Generation (and Other Stories of the Dead and Dying)

The Last Analog Generation—let’s call them LAGgards—are departing, and in their wake a fascinating new world is emerging.

I’ve been surprised lately, when meeting with the nation’s leading financial service providers and discussing the tsunami of intergenerational wealth transfer that is upon us. The generation that is now entering (or will soon enter) the work force stands to receive something like $30 trillion of personal wealth over the next 20-30 years. That’s a staggering figure by any measure, but what’s really surprising is the apparent lack of preparedness and stunning dearth of appreciation for the opportunity – and potential threat – this massive wealth transfer represents to stalwart companies and even entire industry sectors.

For context, according to research, there exists roughly $230 trillion of personal wealth around the globe. That’s both financial wealth, like cash and its numerous equivalents, and real and personal property; the figure does not include corporate or public holdings. To give some sense of perspective to the enormity of that figure, just consider that the gross world product (the combined market value of all the products and services produced in one year by all the countries in the world) totaled approximately $85 trillion in 2012. Thinking about the number another way: To accomplish the transfer of $30 trillion over the next 30 years would mean that more than $1.9 million would have to change hands every minute.

By the time the last baby-boomer has shuffled off this mortal coil, about 13% of all global personal wealth will have changed hands in one form or another. Understanding some of the techno-societal distinctions between the bequeathers and the bequeathees should be a discipline required for anyone who aspires to make sense of the opportunities or threats attendant to the wealth transfer.

Because we develop a sort of digital life for the things in our users’ lives (by collecting and digitally managing all the information about those things), Trōv is becoming a technological bridge between the LAGgards, who were born before the digitization of everything, and the emerging generations who are indisputably “born digital.” In our interactions with users and the service providers that are precariously dangling between these two distinct constituencies, we are developing a sense for both parties. A couple of the big thoughts that seem to aptly describe what influences the perspectives of two groups are at once technological and sociological: the death of privacy and the power of information symmetry.  

Privacy is dead

LAGgards are concerned that their personal information remains private. Okay, this should neither surprise nor irritate any of us. However, the norms for what is considered private are being entirely redefined by the constant revelations of breaches (both nefarious and national) – and the new (ab)normal boundaries of self-disclosure regularly displayed on the massively adopted social media platforms like Facebook, Twitter and their do-alikes.

Just take a peek (if you have the stomach for it) at Instagram’s ersatz cult of spoiled children referenced as #richkidsofinstagram. Photos are regularly posted depicting the profligate lives of a generation of an über-wealthy and unbelievably overexposed generation reveling in their latest acquisitive binge or imbibing impossibly costly libations.

As Robert Scoble, one of the oracles for the emerging generation of Digital Natives, intimated to me, privacy is all but dead, and it is no longer a core issue of the emerging generations. So what? Self-disclosure and widely available information about all connected people and institutions will make a profound impact on reputations: personal, corporate and governmental, and if you’re attempting to engage the new generation of wealthy, transparency is mere table stakes, at best.

Information symmetry — your advisor is dead (he just doesn’t know it, yet) 

Information symmetry will be the death of intermediated businesses. When Netflix started shipping CDs and DVDs to homes throughout the U.S. in the late 1990s, the writing was on the wall for the leading distributors of home video. And, as cloud storage and high-bandwidth digital pipelines became ubiquitous and increasingly affordable, Blockbuster (as a proxy for all things analog) scuttled its storefront retail business – bowing out because its distribution channel was obliterated by technology’s relentless march.

Retail auto sales have undergone a somewhat similar coming-of-(digital) age, as well. For years, LAGgards have been subject to the demeaning process of haggling over price, because details about costs were kept intentionally opaque, giving the salesperson the information advantage. (This imbalance in access to data is sometimes referred to as information asymmetry). The sales process was successfully upended when data from the likes of Carfax and Kelly Bluebook were made instantly accessible to anyone with an interest and a browser. 

For roughly similar reasons, LAGgards have grown dependent on trusted advisers, various specialists and brokers to make decisions about many of their important investments, risk, spending and even medical choices. Data asymmetry is at the very center of the LAGgards’ dependence on these data-equipped intermediaries, and models for business — even entire business sectors — have been built on its expected continuation. 

But make no mistake, these intermediated, information-unbalanced businesses are (or soon will be) in trouble; their added value questionable. With massive data availability, the information-scales are being leveled, and with instant, mobile connectivity, the generation-digitalis is no longer apt to transact or make decisions through a human intermediary. The generations of Born Digitals demand immediate, hands-on, intermediary-free access to nearly all aspects of their lives. 

So what? If your livelihood assumes that your clients will be dependent on you because you alone hold the magic elixir of unique information, beware. You might need to consider embracing the new models of info-egalitarianism rather than resisting them. 

To wit, we recently began testing an in-app capability to insure a newly acquired item at point-of-sale with literally the push of a button. This action alerts the broker-of-record to information that had been previously unavailable and carries tremendous customer-retention and quality-of-service implications (not to mention risk management and potential revenue upticks).

I have been perplexed by some brokers, who appear more concerned about the incremental work that this might create than the expansion and quality of their service. Powered by data accessibility, irrespective of our entrenched operations, the march toward disintermediation is inexorable.

Although these two ideas — personal privacy and disintermediation –- may appear to be distinct families of thought, they are much more than distant cousins. Indeed, they are utterly related and perhaps alone frame the most important distinctions between the LAGgards and the Born Digitals.  

If you depend on your intermediated services and expect them to remain relatively unchanged, you may be setting yourself up for incalculable risk (and you’re most likely a LAGgard). However, if you are comfortable with gobs of information floating around in the cloud and are adopting the tools that help you benefit, then you are likely going to survive the turbulence.

The opportunities arising from the merging of data and disintermediation are just becoming evident – and these trends will entirely reshape seemingly unassailable businesses and entire industries. 

As the fabric of personal information privacy becomes increasingly threadbare, the expectation for transparency in all segments of commercial life will be elevated to a prerequisite for any type of engagement. And as new generations of shoppers, investors and the “serviced” become less concerned about privacy and more connected to — and facile with — data, business as usual will be anything but.

(This article first appeared in JetSet magazine.)