The Power Of Big Data: A Game-changer For Insurance
The following article was written in association with Victor Insurance.
Historically, insurers have amassed vast amounts of data, yet they have been slower to capitalize on this resource by developing new business models or services that leverage data and analytics. As more consumers in the insurance sector shift online to compare products, prices, and make purchases, the volume of data available has surged dramatically.
More importantly, advanced analytics technologies now offer agents the ability to utilize this data in ways they hadn’t previously imagined. However, many agents struggle with internal barriers to becoming truly data-driven organizations, while others delay upgrading their analytics capabilities, waiting for clear business opportunities to arise.
In conversation with Insurance Business, Michael Ferber, head of Victor Insurance’s small business division and Leslie Downs, director of strategic partnerships at Victor, emphasized the importance of data in today’s insurance environment. Ferber, who transitioned to Victor following the acquisition of ICAT, pointed out that while agents are often inundated with day-to-day tasks, they may lack the time or resources to fully analyze the data at their disposal. This oversight can lead to misaligned strategies, where agents may focus on demographics that do not align with their actual client base or spend too much time on low-return segments.
Downs noted: “Agents might be spending a lot of time marketing to a certain demographic or customer segment, but when they start to dig into it, maybe only 30% of those customers are getting to the renewal cycle. This misalignment in focus can lead to wasted efforts and missed opportunities for growth.”
The role of predictive analytics and strategic focus
Downs highlighted the importance of understanding and utilizing data effectively in today’s insurance environment. Downs shared a recent conversation with an agent, which underscored a common issue: “Knowledge provides answers, but agents are often so preoccupied with whatever comes through the door or answering calls that they don’t always take the time to thoroughly analyze their data.”
This includes everything from their perceived target demographic versus what their actual target demographic could be – these often don’t align. Agents spend a lot of time juggling customer requests without fully understanding what they do well.
“When I speak with agents, they often mention that they receive basic statistics from their carrier partners, such as the number of quotes submitted versus the number bound, but this data is typically aggregated across their entire book of business,” Downs said. “I don’t think they easily compile or analyze this information, so they may not always know where they’re succeeding and what they’re excelling at.”
While predictive analytics holds promise for identifying potential growth areas, both Ferber and Downs agreed that many agents may not know how to leverage these tools effectively. “Predictive analytics could be useful,” Downs acknowledged, “but the average agent might not know how to go about it. That’s the crux of the problem.”
Ferber suggested that agencies need to understand where they are typically successful and where they are not, to avoid investing time in unproductive leads. By focusing on areas where they excel, agents can be more consultative and collaborative in their sales approach, ultimately driving better outcomes for both the agency and the client.
He said: “Another interesting aspect for an agent, in relation to their data, is understanding from the outset where they are typically successful and where they are not. When a potential policyholder walks into your office, you might find yourself in a conversation where you know you’re unlikely to succeed because of the type of risk they’re presenting.”
Instead of spending a lot of time on a scenario where success is unlikely, Ferber finds it might be more effective to steer the conversation towards additional products where you have a better chance of success. This approach allows for a more consultative sale, rather than a transactional one, fostering a more collaborative and productive dialogue.
One area where data can definitely assist an agent is in ensuring that the policyholder is purchasing enough insurance to have sufficient coverage.
Ferber emphasized: “If you’re insuring a property, is the value set correctly? If you’re covering tools and equipment, is the value accurately reflected? And with a cyber policy, do you truly understand the level of exposure you’re facing?
“The data available can help agents ensure that the policyholder is adequately covered, which is crucial. If an agent provides guidance that leads to underinsurance and a loss occurs, the policyholder could potentially make a claim against the agent for that advice and guidance.”
Victor’s approach to empowering agents
Victor’s strategy involves equipping agents with the tools and insights needed to understand their data better. Victor’s small commercial platform, Victor for Agents, integrates technology with real-time data processing, enabling agents to receive instant feedback on policy submissions. This helps agents quickly determine pricing or if a policy will be declined, allowing them to focus on viable opportunities.
Moreover, Victor distinguishes itself from newer tech solutions by having a deep understanding of insurance. The team at Victor are all insurance professionals, whereas many competitors do not have that knowledge.
There’s also an abundance of knowledge available from third parties that agents can utilize, such as their agency management systems and carrier partners. Downs pointed out that larger agents likely have data strategies in place, but smaller agents may not. “If they don’t understand what they have, how do they make decisions on their marketing dollars? Where do they decide to market? How do they go about it if they’re not spending the time to learn what’s performing well within their agency?” she questioned.
As the industry moves forward, the role of data will only become more pronounced. Ferber and Downs both emphasized the need for agencies to embrace technology and data analytics, warning that those who fail to do so risk being left behind. “AI is real,” Downs stated, “and as data becomes more refined and accessible, agents must get comfortable with technology. Understanding and leveraging these tools will be key to staying competitive.”
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