The Digital Transformation of Insurance
Breaking Down Business Intelligence
April 16, 2015
In an industry that generates an immense volume of data every day, insurance agency and brokerage executives are increasingly turning to new business intelligence (BI) strategies and solutions that provide additional, data-driven visibility into their clients, prospects, internal operations and carrier relationships.
For many executives, business intelligence solutions build upon the established capabilities of traditional reporting. Traditional reports typically allow executives to examine “what happened” using data based on a defined set of criteria as of a specific moment in time. By contrast, BI solutions extend traditional reporting to focus on “why something happened” by using visual representations of data over time that are both interactive and multi-dimensional, allowing agencies to drill into a particular aspect of the business for deeper understanding.
Crucial capabilities and insights at your fingertips
BI solutions put these crucial capabilities at your fingertips, with easy-to-understand visual illustrations of key performance metrics such as retention rates and hit ratios, as well as complex analysis of client growth, book of business trending, carrier response rate and employee productivity. By looking at data from multiple perspectives, you can gain greater business insights and better understand the cause and effect of what drives your business and how to respond to new business and market opportunities.
For example, when evaluating your organization’s book of business, you can cross-examine and splice data to:
- Identify coverage packages that are popular and profitable within one industry and determine new industries that need identical coverage
- Track active regions for business expansion and net growth
- Know the best insurers with the highest likelihood of writing specific types of business
- Measure business activities against book of business trending, identifying efficiencies and improved productivity
To get a better idea of just how a BI solution could help your agency or brokerage, let’s take a look at some specific scenarios.
Location, location, location
First, let’s examine an issue related to servicing your customers. Consider your agency or brokerage is operating in a region that has experienced a natural catastrophe, like Napa Valley’s 2014 earthquake. As soon as the catastrophic event hits, an owner can instantly tap into their BI tool to visually identify which of their clients could be affected in the geographic area where the event hit. A BI tool can drill down into geographical maps to provide instant access to the critical information (think: who is impacted, what type of coverage do they have, when did the event happen and were they covered, where are their assets) agents and brokers need to proactively reach out to their clients to provide the level of personalized service and guidance expected from their role as a trusted advisor.
Second, let’s take a look a typical challenge related to evaluating new business development. Geographic business intelligence can also visually identify marketing campaign success by region. For instance, an agency or brokerage might be focused on expanding their client base in a specific suburb in their main city of operation. To increase awareness and drive new sales, the owner decides to run an advertising campaign, including local print and TV, for a month targeted at this specific suburb. Following the campaign, an owner can evaluate sales in the region leading up to the campaign, during the campaign, and thereafter to identify any change in the sales trend that could be a direct result from increased marketing activities.
People make or break your business
Insurance has always been a people-oriented industry – defined by personal interactions, relationships, and services. BI solutions can also help with a better understanding of the most important determining factor of your agency’s success: your people. To better understand the growth and profitability of an agency’s or brokerage’s business, executives have to closely evaluate employee productivity and revenue-generating activities to better understand their impact on the growth and profitability of their business.
Executives often consider these questions:
- What is the average revenue per employee at my firm?
- Who are my top performing producers?
- How has adding an additional producer added to business development activities?
While straightforward questions, obtaining this information can take several manual steps, including pulling the data from multiple sources, inputting it into a program like Excel, manipulating it to produce the desired results, and building out simple graphical comparisons. With a BI solution, executives can dynamically evaluate employee performance and business development activities through dashboards that can be adjusted to visually provide different cross-comparisons of data. One view can provide an overall snapshot of how each producer is driving revenue. Another view can rank producers by revenue, added lines, retention, attrition, or a number of any other key business metrics. The ability to quickly toggle between information sets provides executives a user-driven experience to better understand how their staff is driving business growth and profitability.
Collaborating with carriers
When researching services for clients, agencies and brokerages engage with a number of insurer partners to find the best policy for their clients. Agencies and brokerages frequently place more business with insurers that are most responsive and provide the most competitive service. The key to effective negotiations and profitable relationships with your insurers is factual data. How often have insurers provided their own numbers from their own limited or adjusted perspectives, and used their data to attempt to negotiate higher results and/or lesser commissions? Executives now have the ability to track the performance of submission responses, declines, and ultimately what policies were written with each of their insurer partners. With a BI solution, executives can quickly review insurer responses rate to provide clear visual proof that the agency is trying to actively engage with the insurer. Executives can evaluate specific success metrics for their insurer marketing activities, as well as compare multiple insurers down to the submission activities for each policy type.
BI solutions have become a necessity for companies of all sizes, industries and verticals to be highly competitive in today’s marketplace. BI brings insights that will refine an agency’s decisions, permeate client, carrier and employee discussions, and ultimately create new business opportunities and more profitable relationships.
Michael Howe, senior vice president of product management, is responsible for the strategic direction of the Applied product portfolio. Howe joined Applied in 2013 with more than 20 years of experience in enterprise software. He formerly served as senior vice president of Marketing and Product Management at Aptean, a global provider of industry-focused enterprise software. Prior to Aptean, Howe held senior executive management positions at SAP and other leading software companies.