How big data bolsters insurance customer, employee relationships

Tasked with accurately assessing risk, insurance agents and brokers regard data as an essential part of their day-to-day operations.

While this in and of itself isn’t a new phenomenon, the advent of today’s data-driven analytics and machine learning capabilities are poised to enable agents to do their jobs in an entirely new way.

No matter the problem, the benefits offered by big data are more than just hype.

Looking to draft a new policy? Data can provide a historical benchmark.

Striving to enhance the customer experience? Data can help differentiate what drives customer behavior, and provide the right solutions at the right time.

As insurance companies look to stay competitive in an ever more crowded marketplace, they will not only rely increasingly on big data, but will continue to mine for insights and find value in three new ways:

No.3: Predicting risk

The insurance industry works on predicting risk, so if there was a way to more accurately assess risks, everyone in the distribution chain would benefit.

Some of big data’s biggest potential lies in its ability to better determine policy premiums that make the company money while providing a competitive price point for the customer.

Where does the data come from?

For auto insurance, customers install telematic devices in their cars to transmit driving habit information from vehicle to insurance carrier. According to Nielsen, millennials are 44% more likely than the average consumer to use a device from their insurance company to track driving behavior in exchange for discounts.

Other risks can be assessed as well. According to Willis Towers Watson’s 2016 Predictive Modeling and Big Data Survey, which was released in March 2017, roughly two out of three insurers use predictive models for underwriting and risk selection, with many expanded uses planned.

According to Willis’ 2017/2018 Advanced Analytics and the Future Survey, for instance, insurers plan to continue using data analytics to improve customer experiences by providing faster, more personable and informative service. And by 2020, to continue to boost customer-centric strategics, 76% of insurers plan to mine internal customer data, 69% plan to conduct customer surveys, 57% plan to monitor auto telematics, and 45% will turn to social media.

No. 2: Expanding books of business

Big data can also provide visibility around how and where to expand an agency’s book of business. Diversifying into specialty and niche lines can sometimes feel like the great unknown, but insights from big data can provide guidance and demystify new or unknown industries.

According to McKinsey, the advent of big data has created new opportunities for insurers, with one forming partnerships to offer policyholders new solutions based on real-time monitoring and diagnosing. Further, big data has even prompted prompted carriers to create new business models that capitalize on data, by offering the data itself as a business.

No. 1: Improving overall operations

While the advantages of big data are often touted from a customer perspective, it can also make its mark internally.

Intuitive data analytics platforms and agency management solutions can help all employees across the company  better understand and access data on a bigger scale. Historical data can be particularly insightful as it can aid employees in analyzing trends and making informed decisions about the future.

For employees who can better visualize and understand data, they’re able to build a skill set that transcends a specific platform or management system, creating a more technology-savvy and dynamic workforce overall.

Big data might be one of today’s most popular buzzwords, but its capabilities are far from a fad. By embracing big data, carriers and agencies can not only bolster their performance by mining for market insights and expanding beyond their current offerings – they can also use technology to strengthen their largest technology-driven asset: their employees.

Kabir Syed is the founder of RiskMatch and senior vice president of Intelligent Solutions at Vertafore. This contributor can be reached by sending email to ksyed@vertafore.com.

See also:

GDPR noncompliance poses a real insurance risk

6 ways cybersecurity changed in 2017

5 things to know about the NAIC’s new cybersecurity model law