Social media. Smart home applications. Customer service interactions. These are just a few examples of the wealth of data sources that property and casualty (P&C) companies can mine to better understand their audience, manage client relationships, and optimize the underwriting and claims processes.
Applying predictive analytics to this information enables companies to extend these benefits a step further. With the right data strategy, insurance firms can better understand and identify the best market opportunities, develop data-driven plans for sustainable growth, and provide more personalized service tailored to individual customers.
Below are three ways in which predictive analytics is changing how the insurance industry operates:
1. Obtaining data-driven insights
Data has always been a part of the underwriting, distribution, and sales processes, and the volume of data facing insurance firms today continues to expand. This presents companies with both a challenge and an opportunity, depending on how they organize their information. Data that exists in a siloed environment scattered across numerous systems is a missed opportunity. By contrast, when data is managed in one system, it’s significantly easier for companies to use predictive analytics to build and analyze customer profiles, obtain insights into risk, identify marketing opportunities, and predict profit from each customer.
2. Obtaining a 360-degree view of the customer
In the competitive insurance market, it’s critical that firms understand what drives customers’ behavior and decision-making processes. Armed with this information, agents can tailor their policies to their clients, brokers can identify the right insurance carrier, and underwriters can better identify risk. Predictive analytics can also help agents determine which customers they can profit from the most, which are likely to remain loyal, and which are at the greatest risk of canceling or lowering coverage.
3. Providing personalization
Across industries, consumers are increasingly demanding more personalization. Should they find a carrier that can better understand and deliver on their needs, it’s likely even the most loyal customer will make the switch. With predictive analytics, insurance firms can build trust, value, and loyalty through more personalized services. In addition, companies can work smarter by segmenting customers into groups with similar interests, needs, and expectations.
For more on how data is transforming the insurance industry and what firms can do to accelerate their data-driven journey, take a look at this recent APEX of Innovation post.