Less than a week ago Kim Rud-Petersen, Fair Forsikring’s [Insurance] executive of the Business division blogged [in Danish] on Borsen.dk: Kim Rud-Petersen’s subject was the extreme conservatism and very slow - even to the point of laziness - business development within the insurance industry at large. I used to work with DW/BI for an insurance company for several years, and I strongly agree with Kim Rud-Petersen. Let me give a simple example of what I mean; a case of how insurance companies might very usefully activate some of their more or less dormant data to the immediate mutual benefit of their private motoring customers - and themselves!
If I want to trade my car, papers and data are important. With a comprehensive service history and knowledge of accident repairs, trading the car is easier and the price is usually significantly higher, see e.g. www.bilpriser.dk. Of course, some information – e.g. about serious prior damages – will depress the price, but the trend is clear-cut and important: With less uncertainty, the risk premium is reduced and a better deal is possible for both an honest buyer and an honest seller. But when you’re a private trader there’s a snag. You have really no access to solid information about repaired damages, that is privileged information for the auto trade with their proprietary data bases and professional experience. [At least in Denmark; in Sweden a comprehensive and public database is maintained. In the US a less comprehensive privately organised database exists.]
Now enter the insurance industry: Suppose I wanted to sell my car and advertised it at e.g. www.bilbasen.dk. Wouldn’t it be nice to have the option of going to the website of my auto insurer and simply release for public showing the damage and repair history of my car? I could even link directly from my advertisement to my insurance company, and thus make my car more attractive with a more comprehensive description immediately available to prospective buyers. Perhaps I might even be willing to pay some small amount for the privilege of attracting viewers and generating traffic to my insurance company’s website!
But that is only one side of the coin. Try taking a look from the side of the insurance company. As it is now, the insurer hears nothing before the car is sold and the business of insuring it is discontinued. With the described feature, the insurance company gets early warning when a customer releases damage and repair history of his car for public viewing. The company is then able to proactively take steps towards protecting the business; ideally business may actually be increased – doubled - when the company is able to hold on to both the owner/seller (with a new car) and the traded car (with a new owner)!!
This was only an appetizer. Rest assured that serious money is involved overall, making it worthwhile for a progressive and competent insurance company to establish such a feature. It is not even particularly difficult to develop and calculate the idea as a business case. I once did it over 10 pages, but that is a story too long for a BI blog. I am personally convinced the idea will be realised; only question is when and by whom. It would have to be a company genuinely concerned with helping and empowering its private customers, even at the risk of annoying somewhat the auto trade by slightly infringing upon their perceived privileges. I hope some time to be able to tell that story. Stay tuned here at morlin’s BI blog for any possible developments.
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