Within the fiercely aggressive UK basic insurance coverage market, insurers have been more and more gravitating in the direction of what we name the “Vanilla Verse” the consolation zone of clearly understood, high-quality dangers that ship predictable profitability. This intense focus has been pushed by the business’s starvation for richer, extra detailed information, enabling insurers to establish, quantify, and worth dangers with spectacular precision.
However there’s a crucial problem rising from this development. Insurers’ relentless pursuit of ‘vanilla’ dangers means they’re often overlooking or excluding prospects whose threat profiles aren’t simply captured by present information. These “non-vanilla” dangers typically lower-income people, the younger, the aged, or these dealing with distinctive private circumstances, can characterize priceless market segments, providing excessive marginal returns however at present being ignored or priced out because of perceived uncertainty.
The Vanilla Verse paradox
A key purpose for this hole is what we name the “Vanilla Verse” paradox: insurers intimately know the outcomes for the purchasers they settle for, however have little visibility of the efficiency of companies they flip away. This creates a self-reinforcing cycle, affirmation bias, the place insurers turn out to be more and more risk-averse, doubling down on acquainted, well-documented buyer segments, and neglecting probably worthwhile however much less understood dangers.
Machine studying to entry new swimming pools of consumers
The way forward for insurance coverage doesn’t lie in endlessly refining the Vanilla Verse; it lies in breaking past it. Embracing these alternatives by means of clever information exploration might unlock vital aggressive benefits, driving innovation and profitability.
At Shopper Intelligence, we’re dedicated to serving to insurers enterprise confidently past the Vanilla Verse, as a result of actual development comes from exploring the colorful world past the extraordinary.
