Within the fiercely aggressive UK normal 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 trade’s starvation for richer, extra detailed information, enabling insurers to establish, quantify, and worth dangers with spectacular precision.
However there’s a essential problem rising from this development. Insurers’ relentless pursuit of ‘vanilla’ dangers means they’re steadily overlooking or excluding clients whose threat profiles aren’t simply captured by current information. These “non-vanilla” dangers typically lower-income people, the younger, the aged, or these going through distinctive private circumstances, can signify beneficial market segments, providing excessive marginal returns however at present being ignored or priced out attributable to 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 change into more and more risk-averse, doubling down on acquainted, well-documented buyer segments, and neglecting doubtlessly worthwhile however much less understood dangers.
Machine studying to entry new swimming pools of shoppers
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 way of clever information exploration may unlock vital aggressive benefits, driving innovation and profitability.
At Client Intelligence, we’re dedicated to serving to insurers enterprise confidently past the Vanilla Verse, as a result of actual progress comes from exploring the colorful world past the atypical.
