Although Bain and Company announced the day of digital reckoning back in March 2013, most insurance companies are still struggling with a legacy system. Obviously, you can’t overhaul your legacy system overnight. But you can still use data integration and analytics to address many of your challenges.
Leveraging analytics is nothing new to the insurance industry. Actuaries and underwriters have used mathematical and statistical modeling for a long time. But as more data becomes available, more often than not it is siloed, in the hands of different departments within the same company.
Here are three ways to integrate your data and improve your customers’ experiences – without a system overhaul.
1. Integrate claim data with policy data
Although policy data is often readily available to management, customer service data — particularly claim data – may be in a different system. Agent or customer service reps often have to switch back and forth among many windows on their computer screens to answer a customer’s question or provide a status update on the customer’s claim. This obviously leads to a less-than-ideal customer experience, and it certainly is not a very efficient usage of internal resources.
2. Don’t develop predictive models without payment data
Here is another example of how nonintegrated data hurts you. A customer might be late on his auto insurance payment … but the marketing department – which can’t access the payment data — sends that customer a rental insurance offer because its predictive model indicates this would be the best cross-sell offer. This doesn’t mean the model is not working, it means the person who developed the model did not have access to the payment data.
Think about that for a second – it’s a common mistake. You just wasted your marketing spend on someone you should never have targeted. Now, if the customer responds to the offer and applies for the rental insurance, will your underwriter approve the application? It’s unlikely, considering that he is late on his current payment. Not only have you wasted time and money, now you’ve also made your customer mad.
3. Integrate inbound contact data
If you integrated all inbound customer contact data, you would be able to understand the channel preferences of your customer base and get a better sense of how it has been impacted by the digital revolution. More important, you would be able to see who is likely to attrite due to your lack of digital capabilities. This would allow you quantify the impact, better assess the risk, prioritize your digital initiatives, and better justify your digital spend.
Doing nothing to address your customers’ digital needs and preferences is obviously not an option for any insurance company, but jumping in to completely overhaul your legacy system is not wise either.
However, there is a middle ground. Use the above examples as a guide, keeping in mind that the speed at which you begin to integrate your data holistically and drive actionable insights through analytics could determine whether you survive until your legacy system issue is addressed.
William Cao | Chief Analytics Officer
William has earned an MBA from The University of Chicago Booth School of Business, an MS in statistics from Kansas State University, and an MS in applied mathematics from Southeast University. William and his team provide data and analytic leadership to Catalyst’s clients.