Early mover advantage: insurers advised to proactively prep for CDR shake up
Insurers should seize upon the Consumer Data Right (CDR) regime to innovate as it will force refinement of product offerings, pricing models and service delivery in order to remain competitive, EY says.
The CDR will revolutionise customer choice, a new EY report says, driving competition and radically reshaping many industries as consumers compare products and services, and switch more easily between providers.
Institutions that fail to act on the potential for CDR to deliver tailored and timely customer experiences will be “left behind,” it said.
“Now is the moment to begin consuming CDR data to create new markets, attract new customers and monetise high-value data. Otherwise, organisations will simply end up paying for the cost of compliance and watch their customers give their data – and their relationship – to someone else.
“Once consumers start to receive hyper-personalised offers … they will expect them from all of their providers.”
The CDR will enable insurers to analyse data that has previously been difficult to obtain and use this to identify new and better products and services for the benefit of customers.
“We expect to see increased cross-industry collaboration and the rise of hyper-efficient new business models. Purchasing the latest LED LCD TV could prompt an immediate alert to ‘click here to update your household insurance’,” EY said.
Insurers should decide where and how they will participate in this coming “data economy” in which organisations will trade data strategically in the “race to own the consumer”. Those who merely focus on complying with the regulations and don’t actively participate will “find themselves behind the curve” with increasingly smaller avenues for growth.
“Telcos will offer banking and insurance. Whoever owns the relationship will see every piece of data … not only for their primary services but also anything they provide access to,” the report said.
“Compliance on its own renders the business susceptible to threats from competitors,” EY said, adding the “non-active but compliant” entities will be forced to release data to active participants who have successfully “lobbied for the consumer’s consent to demand such data” and investment to entice consumers is likely at a scale that “might shake the foundations of less prepared businesses”.
CDR compliance requires organisations to meet more than 700 obligations – mostly technology – involving a complex set of requirements, data standards and new business processes. The EY Nexus for CDR solution manages the process.
“Insurers don’t have to wait … they can quickly turn their attention to getting an early mover advantage in the data economy,” EY said.
