Within the fiercely aggressive UK common insurance coverage market, insurers have been more and more gravitating in 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 determine, quantify, and value dangers with spectacular precision.
However there’s a vital problem rising from this pattern. Insurers’ relentless pursuit of ‘vanilla’ dangers means they’re continuously overlooking or excluding clients whose danger profiles aren’t simply captured by current information. These “non-vanilla” dangers usually lower-income people, the younger, the aged, or these dealing with distinctive private circumstances, can signify invaluable 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 shoppers 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 grow to be 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 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 progress comes from exploring the colorful world past the odd.