Insurance analytics is a combination of software and data that helps insurers better understand their customers in order to provide them with the best possible insurance products at the best possible prices. Insurance analytics is usually applied to the use of information technology (IT) tools to improve claims processing, reduce costs and increase customer satisfaction.
Insurance analytics can help insurers manage risk and drive profitability. The benefits of analytics include:
Better understanding of customers needs improves sales opportunities. Insurers can use data from third-party vendors or their own applications to identify which customers are most likely to buy additional products or services. For example, a life insurance company may find that an older male customer who lives alone has low coverage on his policy but renews annually anyway because he enjoys the peace of mind that comes with having coverage. This gives the insurer an opportunity to offer him special rates for long-term policies or other products that might appeal to him specifically.
Faster, more accurate underwriting decisions. Insurers rely on data to make decisions about coverage and pricing, but these decisions are often based on past experience or guesswork. Analytics allow providers to uncover new information that helps them make better decisions, faster.
Enhanced agent productivity. Insurers use analytics to automate tasks such as claim handling and claims investigations, which frees up agents for more valuable work. This results in higher customer satisfaction, improved agent productivity and lower costs for the insurer.
Improved understanding of policyholders’ needs. Insurers use analytics tools to identify patterns in how customers use their policies — for instance, by age group — so they can improve their products and services accordingly.
Identify areas of risk and prevent them from arising in the first place. This is important for insurers that are trying to reduce their exposure to certain risks, such as natural disasters or cybercrime. It can also help smaller insurers with limited resources identify areas where they can make a difference. For example, it was found that self-employed individuals who bought health insurance coverage through online brokers or direct marketers were less likely to incur medical expenses than those who purchased coverage through employers or agents. In addition, it was found that drivers with clean driving records were less likely to be involved in an accident than drivers who had been involved in multiple accidents over the past six years.
Insurance analytics can also help insurers reduce fraud. By analyzing data on driver behaviour and claims patterns, insurers can identify potential fraudsters and prevent them from getting benefits they are not entitled to under the policy they purchased.
Identify new opportunities for growth, including new products, customers or regions that have not previously been considered. For example, by analyzing data on claims filed over time, an insurer may find out that claims are being filed at higher rates in certain parts of its portfolio compared to others. This could signal an opportunity for growth in those areas through advertising or product development.
Insurebox is a leading insurance agency management software company. Their software helps agencies manage their policies and queries, as well as create and track claims. Insure Box offers a variety of features to help agencies grow their businesses, including an online claim portal and data analysis tools.
