Companies need to find ways of extracting actionable insights from the vast quantities of data they produce. And while the past few years have seen decision-makers embrace Big Data and predictive analytics to deliver this value, the answer could be more simplistic and less daunting than that. Kelly Preston, data analytics manager at SilverBridge, looks at how the insurance industry can benefit from applying business intelligence (BI) to unlock the value of their data.
The unpredictability of the [insurance] industry means understanding data and using it to make informed decisions have become business imperatives. This not only enables executives to analyse how effective their existing solutions are but also how trends impact the local industry. All of this is geared towards making things more predictable so strategies can be aligned to the realities of market conditions.
By having real-time information at hand, companies can react to industry changes much faster than previously possible. And with competitive advantage in difficult economic conditions coming at a premium, any bit of additional insight and analysis can make a significant difference to the bottom line.
In the insurance industry, companies need to analyse the customer’s propensity to buy, sell, claim, or lapse their policy. BI, when applied across the entire insurance organisation, gives decision-makers the vital information they need to do this.
As an example, information supplied by BI can be used to improve customer retention by combining customer lifetime value models, set by the insurance company, with the propensity to lapse. BI can also highlight the geographical areas and product combinations of customers, enabling the insurance company to gain a better understanding of their ability to improve the cross-selling rate.
And do not discount its value with reporting. BI can be used to draw scheduled reports, used to understand what happened historically in the business. It is often, more commonly, used to generate dashboards that offer a visual representation providing feedback on the achievement of key performance indicators such as claim service level agreements.
In a sense, BI is about improving efficiencies and reducing costs. It enables the organisation to optimise its processes and identify the areas where it is the strongest (and weakest). This puts the insurer in a much better position but is not a silver bullet. There still needs to be an executive willingness to change and learn from the insights provided.
Of course, BI opens the door to many opportunities for the insurer. From optimising existing solutions to developing more customisable offerings catering for specific high growth customer needs, there is potential to be had. Often, this is not even a case of reinventing the wheel but plugging in a BI process into existing operations. Insurers have a wealth of structured and unstructured data. A BI platform simply unlocks the value resident in that [data].
Insurance is fundamentally about making good decisions based on underwriting, regulation, upselling, cross selling, retention, distribution, and others. The accuracy of these decisions lies wholly in high-quality information. This means that BI can have significant leverage in the insurance industry. After all, good information might be essential to any organisation, but it forms the essence of an insurance company.