How insurance agencies can make better decisions with data analytics
Embracing data analytics is one of the smartest, most innovative ways to grow an insurance business.
For many independent agencies, the idea of using data analytics or making data-driven decisions seems out of reach.
If you’re an insurance agent or agency executive, you might think “big data” is only the domain of big businesses with deep pockets, or that it feels way too scientific or complex. Or, you may be using data to make decisions, but you just don’t realize it. And many, especially industry professionals of a mature age, may think it’s just not something they need — all the data they need is right in their heads, so why use a “system”/?
Evolving insurance world
The nature of business today demands data analytics; it’s become necessary for survival. Not only do your customers expect you to have access to the intelligence you need to give them the best advice, but prospective employees live in a world dominated by data and expect to work in one, too. With as many as one-third of insurance professionals expected to retire in the next few years, we must create an environment that attracts young talent to survive. The ability to leverage data plays a vital role in that modernization.
The reality is that leveraging big data and data analytics is far less abstract than you might realize, and it has some very practical applications that can help both you and your clients succeed. Here are a few examples of how any size agency can leverage data analytics to make better decisions.
Avoid coverage gaps
Advise clients on the appropriate level of coverage. Understanding what your clients need is the hallmark of any good agent. You probably already keep a finger on the pulse of the industry by reading news, white papers, and more that keep you informed of the risks and what could be coming down the pike.
But, tapping into big data allows you to go deeper, to unlock more opportunities. For example, rather than advise a construction company owner on the potential for risk, with the right sources in place, you can look at the hard data related to the number and types of claims and the amounts paid across the industry. This way, you can more accurately quantify the risks and suggest specific types of coverage based on what similar clients need and are buying.
Set better goals
Benchmark yourself to improve profitability. Seeing how your business is performing relative to the market can give you great insight into what you can do to improve. For example, analyzing your book of business to see which kinds of policies are performing well can allow you to focus your efforts on developing more of that business.
If you find something that isn’t working, or that takes a tremendous amount of overhead to service it, data gives you the confidence to exchange a high touch risk with a more profitable risk. But you can’t know any of these things without analyzing the data.
Improve sales
Identify upsell/cross-sell opportunities. Analyzing data to find small pockets of opportunity can make a big difference. For example, you can look at the types of policies and riders that businesses in the same vertical typically buy and suggest those to your existing customers.
Or, if you have 10,000 of one type of policy and the carrier has an attractive endorsement for just $12, reach out to those customers and offer it. For them, the ROI can be huge, and for you, those amounts can add up.
Uncover fresh leads
Identify a new product or market opportunities. Expanding your offerings can be a gamble, but if you’ve got good, data-based evidence that suggests it’s a good move, your chances of success are much greater. Perhaps you’re looking to add more auto policies and wondering which new geographic markets hold the most promise. By analyzing carrier, market, and driver data, you can see which areas have the largest appetite for new policies and concentrate your efforts there.
Offer self-service options
Many agencies fear that adding options that let clients do things like making payments and print ID cards might detract from their relationship and take the agent out of the equation. But what they don’t consider is the amount of time agents spend on these mundane transactional tasks — time they could be spending in more meaningful, advisory conversations with clients. Data analytics can help you not only see where your time is being spent but also the ROI on investing in self-service tools. Now you can pick up the phone to call and check-in with a client to see how they’re doing and how you might be of service, rather than using that outreach to remind them a payment is due.
Modernize your business
For many people, the words “big data” seem scary. They conjure up thoughts of data breaches or Big Brother watching your every move. While we do need to be aware of those risks, there’s also a great deal that data and data analysis can do to greatly improve our business and our lives. Without analytics, for example, we would have been unable to quantify the risk of the COVID-19 pandemic and take action to protect people. We also wouldn’t be able to see the potential for growth in any industry or that the future can be better.
While it might seem daunting, embracing data analytics into your agency is one of the smartest, most innovative ways to spur higher client satisfaction, higher agency profitability and business growth. And if the words “big data” frighten you, start small!
Joyce Sigler, CISR, CPIW, DAE, CPIA (jsigler@jones-wenner.com) is an account executive and system administrator at SeibertKeck Insurance Partners/Jones & Wenner and Board Member at Large of NetVu.
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