While the majority of insurers (71 percent) have portfolios that contain data-centric products and services, many are still uncertain when it comes to what data is essential to own, what data is acceptable to use and when it’s advantageous to share it, according to a new report from the IBM Institute for Business Value,”Personalization, Platforms and Data-Designed Offerings.”

The COVID-19 pandemic has left customers with a better understanding of their real insurance needs. They want personalization, convenience, transparency and flexibility, and demand is rising for next-generation insurance products and services such as on-demand or usage-based products and parametric insurance.

Many insurers are turning to platform business models and extended ecosystem engagement for innovation. Not only do platforms suit data-centric offerings, they also can lead to new revenue and faster times to market—and profitability. For customers, platforms can provide access to products typically sold “as-a-service,” which tend to be more personalized and readily available through digital channels than traditional coverage products.

Among the report’s highlights:

• 29 percent of insurers are not yet offering data-based products and services, with most saying such offerings are not compatible with their core competencies or part of their product strategies.

• While 95 percent of insurers rely on third-party risk and customer data, only 45 percent are harnessing the power of real-time data from sources such as telematics.

• 78 percent of insurers seek to improve customer engagement by developing products and services for platforms.

• New offerings launched by insurers involved in platforms yielded 25 percent more revenue and 33 percent more premium than those by other insurers. They also had shorter development cycles, with products taking at least 7 percent less time to launch.

• Developing new products has been proven to help with customer acquisition and retention, revenue growth, and competitive advantage in crowded markets. However, only 26 percent of insurers surveyed recognize that new products and services are significant differentiators in the marketplace.

About the study: In cooperation with Oxford Economics, the IBM Institute for Business Value surveyed heads of product development for 593 insurers in early 2020, examining product and service development activities with a focus on platforms and data-based products.