According to studies, most insurance companies implement innovative solutions to improve their business. They are investing in new technologies to ensure they become more cost-effective and customer-oriented.
One of the areas where insurance companies focus their attention is the pricing structure. Unfortunately, some people are still against the idea because they think insurance is too expensive. Since pricing is one of the main issues preventing people from purchasing insurance, here are some tips on overcoming this.
One-size-fits-all or price differentiation
Other factors for the resistance to insurance purchase are the economic downturn due to the pandemic. In addition, rising inflation rates, the higher costs of commodities, the loss of jobs, and the closure of many companies, made people more concerned about their day-to-day existence.
Thus, companies need to watch their profits to ensure their survival. As a result, many had to rethink their pricing strategies, as it could be a means to monetize value. Since companies can categorize their consumers into segments, price differentiation becomes an effective tool. Technology such as agile insurance pricing software will make the process more accurate, ensuring that the insurer can offer the best personal insurance policy. With the software’s data analytics system, the company can design personalized and customized approaches to suit the needs of individual customers.
Why do you need dynamic pricing schemes?
The most agile form of pricing for the insurance industry is dynamic pricing, which reflects the fluctuation in the prices of products or services. You can also use dynamic pricing to incentivize early purchases. You can use the scheme to drive demand early, offering a lower-priced option for customers who make advanced bookings. It is likewise helpful in catering to customer preferences. An option is to offer different prices depending on the occasion or season and the customers’ willingness to pay.
How new technologies can add value when changing the insurance pricing structure
Insurance companies typically determine insurance premiums on personal data gathered from the consumers. But with the increasing demand for customer experience and satisfaction, as well as product personalization, using insurance pricing software will make it easier to design insurance policies that correspond to the actual needs of the customers.
Further, the insurance company gains several benefits by changing its pricing structure.
- It can differentiate them from the competition. The market environment in the insurance industry is highly competitive. An agile and up-to-date insurance company can act quickly and create unique products to meet current demands.
- It can improve the acquisition and retention of customers. Pricing is one of the factors that can encourage people to purchase insurance. When the insurer gives more value for their money, customers are likely to buy, remain loyal to the company, and may even help the company by recommending others to consider them.
- It becomes easier to cross-sell other insurance products. Satisfied customers may look for other insurance products or services they can purchase from their insurer because they know that the company looks after their welfare.
Selling insurance is complicated. However, changing pricing structures, using industry-specific tech tools, and having in-depth knowledge of target consumers can make the business more profitable.