Just My Analytical Opinion

How risky is that driver with that car? What are the odds a house will flood while a house one street over will not? How do all these variables come into play when setting a rate? What price will allow an insurance company to make a reasonable profit while balancing loss payouts with competitive prices?

Data analysis answers all these questions. Without it insurance is nothing more than a guessing game.

Data mining is so critical to an insurance carrier’s success that they devote an entire department to it. These departments look for data from every possible to source to make sure they are properly setting direction.

The most profitable carriers are not the ones with the best price but the ones with the right price. This only happens through proper data analysis.

In an industry so reliant upon business and market intelligence, why are the ones selling the actual products – the agents – only using data as an afterthought, if at all?

When I work with agencies, I can tell how well they manage their business by asking them questions that show how well they are farming their agency’s massive amounts of data. What is the retention by carrier and by product line? What number of policies is in force per client? Which producers have the best quoted-to-bound ratio? How do these numbers compare to the previous three years?

These are just a few of the questions that are critical to understanding how well an agency is operating. A majority of agents do not know these answers. The agents who do know use this intelligence to readily grow their agencies.

The first step to mining an agency’s data is to have systems that can report and analyze the data. For example, a sales or CRM system can track and report which producers are consistently following the preferred sales process. A comparative rating or quoting system can detail which carriers are competitive and which producers are quoting and closing the most business. Finally, an agency management system can provide insight into existing clients and the carriers that service them.

With these systems in place, the next step is understanding the intelligence they provide.

Initially, the raw intelligence and subsequent analysis can be difficult and overwhelming. Data points conflict with each other. Incomplete and incorrect data make a mess of the numbers. But once the data has been cleaned up, categorized and compiled, a story will unfold.

And still, the hardest part has yet to come – leveraging the data from the research and making informed, forward-looking business decisions.

Even agencies that go through all of that analysis often fall flat when developing and executing a plan based on the deep data dive.

Trusting what the data says and what it recommends is hard when compared to an owner’s gut feeling. Numbers rarely lie. They bring clarity to decision making. When used correctly having a concise dataset actually makes it easier.

Agency and business intelligence has come to the insurance industry. Insurance carriers rely on it. Insurance software companies have embraced it. Growing and successful agencies depend on it.

If your business is not fully using analytics and taking advantage of data’s power, why not?

Topics Carriers Agencies