Here are three key areas for leaders in the industry to apply a robust analytical approach to decision-making:

Offering new types of products

As new risk classes emerge, insurers will need to develop new product lines, or augment existing ones to address them. One such example comes from Liberty Mutual Insurance, which is partnering with Tesla to offer an auto insurance plan created specifically for electric cars.

Related: 7 ways auto technology is impacting insurance coverage

Be it electric car, drone, or cyber insurance, as insurers roll out new offerings, they will inevitably need to navigate the complex web of varying state regulations. In such circumstances, many leading insurers have identified an opportunity to execute an initial introduction in select markets, to gauge interest and financial impact.

By leveraging a robust analytical approach to evaluate these introductions, insurers can develop an understanding of how the new line impacts existing lines, and in which other markets it may be profitable.   

Additionally, with so many different levers to pull with any marketing outreach — such as platform, timing, creative, and messaging — it is critical that insurers understand how and with whom to communicate these new offerings.

Applying the analytical approach outlined above enables insurers to determine the impact of direct marketing campaigns on metrics such as new policies of the featured line. They can also identify the profile of the policyholders that respond best and how prior touches — whether email, online, or by phone — affect the response to the campaign, enabling more profitable and effective allocation of marketing spend.

Tesla and Liberty Mutual Insurance have teamed up to offer an auto insurance plan created specifically for electric cars. (Photo: ALM Media archives)

Driving engagement through the Internet of Things (IoT)

Many insurers are already exploring how to use telematics and the IoT to better align premiums with risk, or even mitigate potential policyholder risk.

One of the key benefits of these technologies is that they create a treasure trove of data on the policyholder, enabling cutting-edge insurers to move beyond purely providing insurance products to providing helpful guidance for loss prevention. For example, through this technology, they can reach policyholders with personalized messages such as driving tips and inspection or vehicle maintenance reminders.

Related: How IoT is inviting insurers into smart homes

With these innovations, carriers can also seamlessly notify policyholders that their door is unlocked or a pipe is broken, signaling risk of burglary or water damage. Leveraging IoT technology to regularly interact with policyholders will likely turn out to be a valuable tactic to help insurers build stronger relationships and drive loyalty in 2018.

The potential for future advancements related to telematics, IoT and automation has yet to be fully realized. Insurers that aim to incorporate elements of these technologies into policyholder interactions should carefully test their effect on the policyholder experience, claims frequency and claims losses, by measuring retention and long-term satisfaction before investing time and resources into full-scale rollouts. By evaluating the impact of such new technologies on policyholder behavior and engagement, insurers will be armed with the insights necessary to identify which programs work with which policyholders. This will ultimately enable them to more efficiently deploy financial and human capital for the right services and programs.

Increased digital service in the age of immediacy

Increasingly, consumers are expecting simplified interactions with service providers, seeking personalized communications and mobile access at their fingertips, when and where they want it. In response to these shifting policyholder preferences, some insurers are adapting and developing new digital offerings.

Allstate, for example, is building out its mobile strategy and refining its app to allow policyholders to easily perform different functions, such as submitting loss reports or requesting roadside assistance through their mobile devices.

Related: Customer expectations: 4 digital technology implications for insurers

As insurers strive to widen the range of digital tools and platforms offered to policyholders, there may be opportunities to increase operational efficiencies and customer satisfaction; however, there is often a significant upfront investment required for the development of such apps and other digital offerings. Further, these initiatives may not always have the expected result, and may fail to drive an increase in policyholder engagement or new policies. With this risk in mind, insurers must carefully assess the areas of their organization where it will be most valuable to deploy additional digital services.

Overall, taking a data-driven approach to enhancing policyholder acquisition, retention and overall customer experience will help insurers make more informed, profitable decisions. By proactively managing the uncertainty of new initiatives, they will position themselves to win in 2018 and beyond.

Michael Calamari is vice president of Applied Predictive Technologies (APT), and the lead for APT's insurance practice. He can be reached by sending email to [email protected].

The opinions expressed here are the writer's own.

See also:

9 ways insurers can drive more value from technology investments

Technology in cars is changing the market and how we drive