The insurance industry is experiencing a significant transformation fuelled by the ubiquity of digital technologies. As these solutions gain traction in this sector, they add complexity to a regulatory landscape that insurance firms need to navigate, especially when it comes to Customer Identity and Access Management (CIAM). These regulations stress the fair treatment of customers, transparent sales practices, robust governance and consent. For instance, the GDPR emphasises that consent is no longer implied and must be “freely given, specific, informed and unambiguous.”
To uphold this, consent management can help insurance companies respect the data privacy rights and preferences of their clients, partners, and staff and help them comply with regulations.
The Criticality of Consent Management
Consent management is obtaining, managing and maintaining consumers’ consent for collecting, using and sharing their information. It means implementing clear and transparent opt-in and opt-out mechanisms that enable individuals to make informed decisions about how organisations handle their data.
Effective consent management is essential for building trust between businesses and their customers, ensuring that personal data is handled fairly, transparently, and legally. Additionally, by respecting individual preferences and giving them control over their data, businesses can foster better relationships with their users and show their commitment to privacy and data protection.
The Legacy Risks
Many insurance companies are still bogged down with legacy solutions which hamper innovation and undermine customer trust. While technology upgrades might seem expensive, legacy technologies will cost them more in the long run.
Maintaining legacy systems is also expensive – updates, patches, and regulatory changes will quickly drain the company’s coffers. Conversely, McKinsey’s research reveals that IT costs per policy for insurers with modernised IT can be 41% lower.
Moreover, these systems are no longer fit for purpose, and putting upgrades on the back burner leads to mounting technical debt, which sees insurers slipping down the curve and losing any competitive edge. Finally, legacy technologies are unable to provide the level of service and personalisation the consumers demand.
Why CIAM Matters for Insurers
There are myriad ways CIAM can be applied within the insurance industry, particularly focusing on customer onboarding and the user journey:
- Customer Onboarding Process: This initial interaction between an insurance company and its customer sets the tone for the entire relationship and plays a key role in building trust and satisfaction. With CIAM, the onboarding process can be streamlined and personalised, ensuring a seamless experience for the client from the moment they express interest in the firm’s services.
- User Journey Orchestration: CIAM platforms enable the orchestration of the customer’s journey by coordinating and sequencing all client touchpoints to ensure a seamless and personalised experience while maintaining security and compliance.
- ID Verification: In the insurance industry, where accurate customer information is critical for risk assessment and policy issuance, Identity verification is a vital part of the onboarding process. Robust CIAM platforms incorporate effective ID verification mechanisms, such as document verification and biometric authentication, to ensure the authenticity of customer identities while eliminating friction and fraud risks.
- MFA/Passkeys: Multi-factor authentication (MFA) and Passkeys add an additional layer of security to the customer authentication process. By requiring users to provide multiple forms of identification or leverage Passkeys for a passwordless experience, insurance firms can dramatically reduce the risk of unauthorised access and identity theft, enhancing trust and confidence in their services.
- Consent & Preference Management: Regulations such as GDPR and CCPA/CPRA have seen consent and preference management become integral to enable “always-on” compliance. CIAM platforms help insurance companies obtain explicit consent from customers regarding the use of their personal data and preferences for communication and personalised service offerings.
- Progressive Profiling: Progressive Profiling, or the gradual collection of customer information over time, allows insurance entities to develop comprehensive profiles without overwhelming the customer with long forms, while also respecting customer privacy preferences. CIAM platforms facilitate this process by allowing “just-in-time” data collection at various touchpoints along the user journey, enriching customer profiles and enabling personalised services.
- Ongoing User Authentication: To maintain the security of customer accounts and prevent unauthorised access, CIAM platforms employ advanced authentication mechanisms, such as session management and behavioural analytics, to continuously monitor user activity and detect suspicious behaviour. This proactive approach helps mitigate security risks and safeguard sensitive customer data.
- Data Deletion and Relationship Exit: Customer data privacy is paramount and individuals should have the right to request the deletion of their data and terminate their relationship with an insurance company at any time. CIAM platforms help customers enforce their digital rights by providing easy-to-use tools for data deletion and account closure. This ensures compliance with data protection regulations and demonstrates a commitment to customer privacy and control.
Consent Management in Insurance
Consent management is fundamental to the insurance model for several reasons.
For one, personalised offerings and underwriting depend on data usage. Insurance companies collect vast amounts of personal data to tailor their offerings and underwriting processes to each customer. This includes health, lifestyle, driving behaviour, property characteristics and more information.
Consent management ensures that insurers obtain explicit customer permission before collecting and using this data. This helps insurers offer personalised products and services, which leads to higher customer satisfaction and retention.
It also demonstrates respect for customer privacy, building trust, which is vital in the insurance industry, as customers are more likely to share accurate information, engage with and remain loyal to brands that respect their privacy preferences and offer seamless user experiences.
Importantly, consent management helps insurers avoid hefty fines and damage to their reputation by assisting them to adhere to legal requirements by obtaining valid consent from customers before processing their data.
In addition, the burden on IT is reduced through centralised and automated user management processes. Businesses can optimize resource allocation and improve operational efficiencies by streamlining data collection, storage, and processing.
Building a Successful CIAM Strategy
Any successful CIAM strategy must be built with consent at its core and follow best practices, such as:
Simple, Understandable Language: Avoid technical jargon and legal terms that may confuse or overwhelm users. Clearly explain what data is being collected, why it’s needed, and how it will be used.
Avoid Pre-Ticked Boxes: Instead, give customers explicit opt-in/opt-out choices. Pre-ticked boxes can be misleading and might not accurately reflect the customer’s intentions.
Make Consent Options Easily Accessible and Modifiable: Provide instructions on modifying consent preferences anytime. Customers must be easily able to update their consent choices or withdraw consent.
Collect Only What Is Essential: Avoid collecting excessive or irrelevant data that could pose privacy risks or regulatory compliance challenges. Limit data collection to what is strictly relevant to providing services or fulfilling contractual obligations.
Regularly Review Data Holdings and Purge Unnecessary Information: Develop data retention and deletion processes to ensure compliance with data protection regulations. This reduces the risk of data breaches and enhances overall data security.
Seamless Integration with Systems and Apps: This enables consistent enforcement of consent preferences across all touchpoints and ensures that customer data is managed consistently throughout its lifecycle.
Ensuring sustainable growth and success
In the insurance industry’s dynamic landscape, balancing security, customer experience, and regulatory compliance is at the heart of sustainable growth and success. A consent management framework integrated within a modern CIAM solution is the answer for these firms. Business executives must prioritise such a proactive approach to ensure transparency, trust, and compliance by giving customers data control while enabling frictionless experiences and improving security.
This article was contributed by Kirsten Doyle, who has been in the technology journalism and editing space for nearly 24 years, during which time she has developed a great love for all aspects of technology, as well as words themselves. Her experience spans B2B tech, with a lot of focus on cybersecurity, cloud, enterprise, digital transformation, and data centers. Her specialties are in news, thought leadership, features, white papers, and PR writing, and she is an experienced editor for both print and online publications. She is also a regular writer at Bora.
