How independents can leverage big data

Big data can be a confusing concept for producers, but with the right approach, it can improve both carrier and client relationships.

Risk Management News

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The advent of social media and other online sharing sites has elevated the power and value of personal information. This “big data” gives the buyer unique insights into the psyche of the populace, improving marketing pitches and, ultimately, the bottom line.

In the insurance industry, big data has always been available but it’s only recently that industry professionals have had access to tools allowing them to leverage that information to improve their end product and fine-tune rates and pricing.

However, while carriers have jumped onto these developments, independent insurance producers have lagged behind.

Michael Howe, Senior Vice President of Product Development for Applied Systems, says that in his conversations with independent agents, the relative inability of producers to manipulate and leverage big data is a recurring pain point for the sector.

“The problem in this industry is that they have tons and tons of data, but don’t have the resources or time to do anything with it,” Howe told Insurance Business America. “They’re sitting on this gold mine,  but they don’t know how to turn this data into a form humans can actually consume.

“It’s an obvious and blatant pain point agencies of all sizes have.”

The strain led Howe and Applied Systems to develop its Business Intelligence (BI) platform, Applied PerformanceManagement, which pulls data from its agency management systems and other Applied technology to allow users to access and interpret data in a non-technical way. The results have been obvious and immediate, showcasing just what agents and brokers can do with big data once they have the tools.

Better understanding customers
With the ability to manipulate big data, Howe says independents have greater insight into their clients—where many live, which products they are buying, which are most profitable to the agency and where producers may have an opportunity to cross-sell.

Analyzing clients by zip code, for example, can reveal interesting insights about product interest and risk exposure that wouldn’t be so immediately obvious without tools to break down big data.

Evaluating internal operations
The second area big data may improve is analysis of just how well an agency is performing.

“[Big data] can shine a spotlight on international operations,” Howe said. “It teaches you things about your own business that you didn’t know before—how efficiently are you operating? Are you doing things quickly? Are certain areas of business getting hung up for different reasons?”

Improving carrier relationships
Finally, access to big data has the potential to aid agencies in more wisely selecting carrier partners. Traditionally, Howe believes agents are at an informational disadvantage when it comes to yearly negotiations.

“The carrier often comes in and says, ‘Here’s all the data that shows you’re not doing enough business,’ and that has an effect on agreements and pricing,” Howe said. “The challenge for agents is that they often have very little data to support their own positions.”

Generating data from the agency’s perspective, meanwhile, gives agency principals and producers the ability to have a fact-based conversation.

Leveraging big data
Despite these capabilities supported by access to big data, Howe says some independent agents are still loathe to adapt their business practices and capture this information.

“It’s shocking to talk to a customer who says they don’t care about it,” he said. “They are burying their heads in the sand.”

Fortunately, Howe said that group of agencies is growing smaller every day and the vast majority of agencies are now interested in big data. The challenge for Applied Systems, and other technological servicing companies, is reaching agencies and providing the products they need to make use of their access to client data.

 

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