There is £10 billion-plus worth of home and motor premia going a-begging for those insurers able to better meet customer needs by providing new, more personalised products (Figure 1). This largely untapped premium pool represents the three-fifths of UK customers who want something other than the standard, basic policies that are widespread today. This was a key finding in our recent study on consumer preferences, “What do UK customers want?”.

Figure 1. Estimated premiums by product, £bn

How can insurers meet the hyper-personalisation imperative?
These premium pools are all very well, but how do insurers pivot from the commoditisation, which has characterised the market since the advent of price-comparison websites more than two decades ago, to personalisation? Some home and motor insurers are well on their way on that journey, for example using smart home technology to reduce losses, and data from in-car sensors to tailor pricing. Nonetheless, for now, these products are niche. Only in small segments have customers been persuaded that new types of insurance far better meet specific preferences than a standard policy.

But insurers have their work cut out to overcome customer disengagement with new products. Insurers need to get better at marketing. Most importantly, marketing communications need to be highly-relevant by explaining to the customer why a new product is better than what they have, or even meets a need that the customer might be unaware of.

This is largely unchartered territory, but some examples are popping up. For instance, HDI, the German insurer, uses an Open Banking Platform to access its customers banking data, with their consent and, in return, provides customised offers. These range from retail vouchers (e.g. “10% off at Amazon because you love buying gadgets”) to insurance offers (e.g. “because you buy baby milk, perhaps it’s time to buy life insurance”). It’s not hard to envisage a world where this becomes personalised, or even hyper-personalised, and more effective (e.g. “You have had a couple of leaks and your boiler is overdue a service. Let us send around an engineer to sort all of this and put you on a smart home policy to prevent further leaks”).

These examples hint at the building blocks that home and motor insurers need to have in place in order to meet the hyper-personalisation imperative. These building blocks are: data science, behavioural science and ethnographic research capabilities (see Table 1). Taken together these three building blocks are key in answering the “what”, “how”, and “why” of customers’ behaviour.

Table 1. What do customers want?

What capability do insurers need?

How can this capability help insurers?

Data science

Enables insurers to differentiate between actionable and non-actionable data. The data will help insurers develop algorithms that can identify behavioural patterns and model their customers’ propensity to buy a product and offer timely products/services to their customers.

Behavioural science

Enables insurers to explore, measure, and predict their customers’ behaviour and tailor products and services accordingly. More than 30 years of research demonstrates that individuals have behavioural biases. Behavioural science enables the design and development of habit-shaping products and services to help customers overcome such biases (e.g., through nudges).

Ethnographic research capabilities

Enables insurers to: (1) gather data on their customers’ observed behaviour, rather than stated intentions; (2) account for the contextual variables (i.e. cultural and social circumstances) involved in their customers’ behaviour; and (3) reduce the impact of their biases and beliefs about their customers’ behaviour.


Insurers need to view their customers as individuals with unique preferences and needs, and offer them a range of products that cater to their context-specific needs. It isn’t enough for insurers to offer customers a single product with minor variations in deductibles, limits and terms of cover. The shift required is more fundamental: it is about offering the products, services and communications that meet customers’ manifest and latent needs. To do that, insurers will need to get way more personalised, based on customer-specific data, in their marketing.

Insurers rightly see themselves as data companies, employing statisticians and actuaries, with reams of proprietary data as a source of competitive advantage. To this historical capability they need to add behavioural science and ethnographic research capabilities so that they can exploit their data advantage. That way, they can break through from commoditisation to personalisation.