Today insurers are faced with a growing amount of incoming data from claims, underwriting, CRM systems, billing, and policy administration. A lack of formal data management policies within insurance companies has resulted in siloes of unstructured data, proving useless to insurers. Improved management and analytics of this data can provide greater insights into insurers information. There are a number of ways in which data can be used, including:
- Risk management
- Customer analytics
- Financial Performance
Insurers have always used analytics to determine risk factors when calculating insurance premiums, assessing the probability and expected costs of specific exposures, illness, and death. But today there is such an influx of data from various sources and advanced technology, enabling greater insights. Improved insights provide insurers with enhanced knowledge to more effectively calculate pricing and predict risk and fraud within particular demographics.
Advanced technology also enables less technical professionals to easily analyze data, with the option of using visual analytics. The Salesforce platform offers users a dashboard providing a visual overview of claim information, allowing insurers to easily detect trends at a glance.
Analyzing historical customer data provides insurers with the ability to determine their sweet spot customer, segmenting them from less profitable or more risk averse prospects. Concentrating on retaining profitable prospects ensures that insurers can earn a profit while providing competitive premiums for particular segments of the market.
Customer buying patterns can determine which demographics will be more susceptible to cross-selling and/or upselling opportunities. Retention rates and customer lifetime value help sales and marketing departments determine which segments of the market to target. Analyzing data even further can allow sales and marketing teams to monitor response rates from different demographics to refine campaigns.
Understanding where to invest, and when, is an important consideration for insurers. Capital allocation and investment returns are critical to an insurer’s financial performance. Advanced analytics enables insurers to integrate internal data with external economic information, allowing them to quickly react to market conditions.
Data analytics can assist insurers with all aspects of their business, from risk assessment right down to selling insurance premiums. This actionable data leads to more accurate decision-making and hence results in a more profitable business.
Along with the improvements in technology to enable enhanced analytics, improved access to third-party data allows insurers to pose a number of new questions, and better understand different types of risks.