If you’re in the insurance industry, you know this is a business of managing risk. Wouldn’t it be nice to see risk before it shows up on your desk? This is where predictive analytics can help.
This is now a real, usable technology available to most insurance organizations. It delivers instant risk management by identifying risk as early as possible in the policy underwriting process.
What Predictive Analytics Really Is?
In plain English, predictive analytics uses data to make educated guesses about what’s likely to happen in the future. Trends, patterns, behaviors, or anything else can help spot what’s coming around the corner when projecting risk.
For insurers, this means:
- Flagging high-risk applicants before they ever hit underwriting
- Spotting clients who may lapse on their policy
- Identifying prospects who are most likely to buy a policy or refer a prospect
- Determining which product best fits a prospect based on age, job, or online behavior.
It’s not magic; math and machine learning are incredibly accurate at predicting the future.
Why It Matters
Predictive analytics empowers us to work smarter, not harder. Instead of wasting time chasing riskier leads, insurance organizations identify their best prospects and inform all selling funnels about the prospect profile they seek.
Instead of reacting to cancellations, organizations can proactively contact clients. Predictive analytics shows the most at-risk clients who are likely to cancel and address issues that may drive the clients away. Predictive analytics makes the following possible:
- Marketing efficiency – Targeted marketing to prospects most likely to respond.
- Client retention – Increased retention, with the ability to spot and address negative behavior before it materializes.
- Cross-selling – Data that predicts what other insurance products clients may need before they ask, improving organization product portfolios.
This next-level service makes the organization more helpful and relevant, creating better opportunities for a long-term relationship with clients.
Using Data to Create Big Wins
Insurance organizations have A LOT of data, so it’s all about organizing and examining the data correctly. Predictive analytics is the team of data scientists that slice and dice data quickly and efficiently.
Organizations must have a strategy that directs the focus toward big wins. What do you want to achieve, and on what schedule do you want this to occur?
Look at the clients for patterns on who bought what, and when they purchased it? What policies stuck, and what didn’t?
Data show that 70% of clients buying a policy were women over 60, and they almost always responded to text messages, not emails. This is excellent information about predictive behavior in action, and it allows you to retool your next campaign for better results.
It’s Not About Replacing Humans
Predictive analytics is a tool, not a replacement for people. Experience, intuition, and relationship skills are still the MVPs of insurance.
However, this technology delivers better insights into the current market, and allows business to make data=driven projections in a timeframe that suits the company. People must decide where to focus this data and what to do with it to maximize its analytical impact.
Predictive analytics is like Waze for insurance organizations. People still have to drive, but now you get traffic updates and route suggestions to help get there faster. Predictive analytics isn’t just a futuristic idea: it is happening now.
Insurance organizations that tap into it now gain a significant edge in underwriting, sales, and retention by using the data already there.
It’s about asking the right questions from data to empower numbers that deliver a nudge in the right direction. Agility Holdings Group (AHG) invests in innovative InsurTech, HealthTech, and related companies that aim to revolutionize access to insurance products, establish patient care, and improve health outcomes. Please visit our LinkedIn page for more information about AHG.