Article Synopsis :
Harnessing Big Data for customer insights invariably raises customer privacy concerns.
“Engaging contradicting customer needs in a digital world: data based benefits vs. privacy” from BearingPoint discusses the data vs. privacy paradox with ideas on how to handle it.
The paper suggests the following aspects are important for insurers in addressing the contradictory needs for data privacy and new service offerings:
- Be transparent when handling data: It’s important that customers understand for which purpose and in which way their data is used
- Receive affirmation for gathering data: Clearly ask customers for consent to share data and give them the ability to delete data if desired
- Protect personal data: Data breaches—which can be disastrous—should not be taken lightly
- Be responsible: Complying with regulations and acting per the values of customers are absolute baseline minimum requirements
The article suggests insurers can meet both the need for customized services and enhanced privacy at the same time. The key lies in being more transparent while respecting all data regulations. The more open you are with customers (within legal limits) the more latitude you’ll likely have with respect to data collection and product development.
The article outlines a five-step approach to effective information management and data privacy:
- Assessment of current information landscape – Identify where you stand with respect to how you are handling data and privacy issues.
- Definition & classification of information domains – Define frameworks for identifying and handling sensitive data.
- Risk assessment – Assess customer-tolerance levels in the context of estimated likelihood of occurrence and scope of potential damage.
- Goal setting – Identify goals and align them with established privacy principles.
- Implementation roadmap and monitoring – Execute plans and monitor progress.
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Digital Insurer's CommentsIn the digital age there is increasing demand for customized services enabled by Big Data and Analytics with telematics and UBI two such examples. At the same time amid growing privacy concerns customers yearn for more self-determination with regard to their personal data.
Due to the growing awareness of customers regarding this topic, we believe it’s good business for insurers to focus on transparent communication so that the customer’s trust and loyalty are assured. Granting customers more control over their data including how it’s used is the surest path to securing ever more customer data.
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