It’s common these days for insurance companies to prioritize attracting new customers over other growth strategies. This strategy is especially attractive for insurance organizations with outdated technology systems that make it difficult to see and learn from data, as it doesn’t require any organizational changes and may be the only way to increase net income.
But it’s not sustainable.
Eventually, insurance companies will reach a point where inefficient practices will scale up to revenue leaks that are too significant to ignore. What’s more, there’s only a finite number of new customers a company can bring in, meaning that eventually, there won’t be any more revenue to funnel into advertising and marketing strategies.
The other problem is that adding more and more new customers without investing in back-end customer support likely means those customers won’t have a great experience, which means they’re likely to leave, which means the company will need to attract even more new customers to maintain its revenue.
The good news is that data visibility can make it possible to solve these problems and greatly improve an insurance company’s bottom line. Here’s a brief explanation of data visibility, plus three ways it can boost an insurance organization’s finances.
What Is Data Visibility?
Data visibility is what it sounds like: the ability to see – and, crucially, use – all the data an organization has access to. Complete data visibility is achieved when an organization standardizes the format of its data, unifies disparate data sources, and establishes protocols for standardizing and unifying new data that enters the organization. In other words, visibility into company data can scale.
(For a detailed explanation, check out our post Get Visibility into Your Data to Jumpstart Your Automation Journey.)
At an organization with complete data visibility, there is a single source of truth that anyone from any department can refer to for real-time information about anything they need to know to do their job.
For example, with data visibility, customer service representatives can access a full, 360-degree view of customers via a single login. While handling a customer call, they can easily see…
- Which products the customer has
- Billing and payment history
- Claims history
- Information about which marketing emails they’ve opened and clicked on
- … and more
This means the representative can easily and quickly answer any questions a customer has, without juggling multiple logins or contacting other members of an organization – a game changer for customer experience.
Now let’s dive into some concrete ways that data visibility can eliminate an insurance organization’s revenue leaks.
How Data Visibility Can Prevent Fraud
Today, fraud costs insurance companies $40 billion per year, making it an immense drain on revenue.
One way to reduce fraud is to leverage advanced data analytics (like machine learning) to identify potentially fraudulent behavior faster and more accurately than human analysts can. For example, introducing predictive analytics capabilities can make it possible to both reject more fraudulent claims and service legitimate claims faster.
This means claims professionals can focus their energy on engaging with customers and building meaningful relationships – over time, work that can help improve retention and reduce churn.
Of course, building a predictive analytics application to identify fraud requires an insurance organization to have unified, standardized (aka visible) data.
How Data Visibility Can Streamline Underwriting
Preventing fraud isn’t the only way data visibility can benefit insurance organizations. With unified, accessible data, they can also streamline underwriting.
A 2017 analysis predicted that insurance underwriting has a 98.9 percent probability of being automated, largely because data-powered algorithms can analyze and assess information in insurance applications – i.e., do the work of underwriting – much faster and more accurately than humans can.
This is possible through advanced analytics capabilities like forecasting and pattern matching, among others. An automated underwriting system can even improve over time when it includes machine learning capabilities that make it possible for these tools to adapt to new data points and inform future decisions.
When underwriting is more accurate, insurance companies reduce their exposure to loss, which means they can expect fewer claims and thus reduce the total amount they pay out.
Still, for most insurance companies, the transition to automated underwriting won’t totally eliminate the need for human workers. Instead, human underwriters will work together with these automated systems – to handle unusual edge cases and ensure the model continues to return accurate assessments, for example.
As with claims processing, this means that underwriters are able to dedicate their time and energy to engaging in meaningful ways to solve more complex problems and find new ways to grow the company.
How Data Visibility Can Improve Customer Value
Data visibility can increase both the value that an insurance company delivers to its customers and the lifetime value of customers to the insurer. This is possible because data visibility empowers the insurer and its employees to understand customers fully – with the 360-degree view I mentioned above – so they can make helpful, timely recommendations that meaningfully improve customers’ lives.
For example, imagine a health insurance customer who adds a new insured to their policy. The birthdate of the insured indicates that they are a new baby – the insured’s first child.
Across this insurance provider, customers who have children are much more likely to purchase life insurance than those without – an insight that’s available thanks to data visibility.
Once the child has been added to the customer’s policy, the system prompts the agent or customer service rep that the customer is a great candidate for life insurance and suggests an email template to send them about the organization’s life insurance offerings.
The customer opens the email, clicks the link, and follows up with a call – on which they decide to purchase a life insurance policy.
Everyone benefits from this interaction: the insurance company is happy because it’s sold another policy, and the customer is happy for two reasons. First, because they’ve taken steps to protect their new family, and second, because they can tell that their insurance provider is looking out for the best interests of their family.
Again, this kind of service can help strengthen customer relationships, which can boost retention and reduce the need to constantly attract new customers.
An Investment in Data Visibility Can Translate to Savings Across an Insurance Organization
Those are just three ways data visibility can reduce revenue leaks and improve an insurance organization’s bottom line. The reality, though, is that every part of an insurance organization can benefit from better data visibility.
More visible data can enable the development of strategic sales campaigns, make it easier to ensure you’re delivering important policy communications to the correct address, and help standardize customer care methods that work best. The big-picture benefit of data visibility is that it enables an entire organization to learn from – and make better decisions based on – everything that’s happened in the past.
When you’re ready to talk about how data visibility can have a transformative impact on your insurance organization, get in touch. We’d love to help you visualize – and attain – your future state.
Meet the Author: Thanneermalai Krishnappan, Technical Manager
Thanneermalai is responsible for our client relationship management, program management, budget and resource planning. He is an experienced solutions architect in the IT and services industry, and currently manages more than 30 consultants.
Prior to joining Saggezza, Thanneermalai worked for a major telecom company in India.
Saggezza is a proven technology and consulting partner that delivers personalized, high-value solutions to accelerate business growth.