Data Analytics: Insurance in a League of Its Own

It’s that time of year again. The leaves are changing and baseball season is at its peak. For many casual fans, in the stands or on the other side of a television, the game appears unchanged across history. The wind-up, the crack of the bat, the atmosphere of the ballpark and the hunt for October all remain the same. The World Series is in its 115^th incarnation and while baseball still seems like the same game it was 100 years ago, it’s also a completely different game today.

Before the players ever set foot on the baseball diamond, something else entirely has transformed the game behind the scenes. That something is data analytics and not only has it revolutionized baseball, it’s done the same for practically every industry – including insurance.

From America’s Pastime to a Data Analytics Showcase

The first baseball game took place approximately 180 years ago. A few decades later the first box score – a two-line chart that reports each team's run totals by inning, and total runs, total hits and total errors on a line – was developed giving fans a way to keep track of games and player statistics. Through the second half of the 19^th century and the first half of the 20^th century, baseball statistics had little to no influence on how the game was played, yet box scores stuck around.

Baseball and data analytics first crossed paths in the 1960s and 70s when first hobbyists, then researchers began to ask specific questions about in-game activity, collecting and summarizing the data in what collectively became known as Sabermetrics, the empirical analysis of baseball – a term coined by writer, historian and statistician, Bill James¹.

James gave a voice to quantitative measurements of batting, pitching and higher mathematics statistics like value over replacement player (VORP) or wins above replacement (WAR), replacing simple ratios, such as ERA, to give a more complete view of what’s really happening on the baseball field. Whereas the box score and other early work in statistics put a runner on first base, metaphorically speaking, James’ pioneering work on data analytics in baseball loaded the bases for the grand slam to come: the emergence of predictive analytics.

In 2002, Sabermetrics hit the big stage as the General Manager of the Oakland Athletics, Billy Beane, and the A’s went on a 20 game winning-streak in a season where they implemented – at the time – unpopular techniques to put players on base and score runs. Oakland’s feat was not the sole deciding factor for teams to consider changing their approach to the game – multiple teams experimented with the ideas implemented by the A’s prior to the 2002 season – but the team’s ability to earn runs compared to outs that year was a clear success story for Sabermetrics. The season was immortalized first in Michael Lewis’ 2003 book, Moneyball: The Art of Winning an Unfair Game, then in the 2011 film, Moneyball, starring Brad Pitt.

Playing the Long Game

The use of data analytics has experienced a meteoric rise across different industries and forms of entertainment in the past few decades. For insurance agents, the long time-spans present in baseball games and seasons may feel right at home. Baseball teams invest considerable capital – both fiscal and human – to ensure their team is prepared for upcoming seasons in an attempt to win the World Series. Agents, likewise, invest significant amounts of time and money to earn business from new customers and then develop and maintain trusting relationships with clients through seasons of renewals. When an agent earns new business or increases retention, the feeling can be akin to hitting one out of the park.

Optimizing operations and relationships is not always a homerun. It’s hard work each and every day; you may hit a single discovering of a new lead or strike out after a client leaves you unexpectedly. However there’s one tool you can implement today that’s a real game changer in insurance: data analytics.

From the Minors to the Major Leagues with Data Analytics

Implementing a successful data analytics strategy within your business can put you in a league of your own compared to other independent agencies. Data analytics tools level the playing field by maximizing the value of your agency’s data. By becoming a data-powered business, you can gain a competitive edge through enhanced decision making, insight discovery and process optimization.

According to Bain & Company, data-powered businesses are 5x more likely to make faster decisions than their peers².

Consider the following ways data analytics can bring value to your business:

• Reinforce decision-making processes with rich sources of external data analyzed with machine learning.
• Cut claims handling time and costs with predictive analytics.
• Eliminate fraud through enhanced, AI-driven identity verification techniques.

Data analytics tools, like Applied Analytics, allow you to obtain powerful graphical business insights from your existing management system data to drive greater employee productivity and increase profitable relationships with clients and insurers.

In baseball, teams use data to predict outcomes and back into decisions. As our tools become more AI-enabled and future-predictive, we can make more informed business decisions and identify new market opportunities.

Are you still using yesterday’s reporting tools in today’s highly competitive insurance marketplace? Like baseball, the game of insurance has changed. By making data analytics a part of your playbook, you position your agency to hit a homerun.

Grow your business today with data analytics through Applied Analytics.

Footnotes
¹: A Guide to Sabermetric Research
²: Bain & Company - Big Data: The organizational challenge

Analytics, 2019, Industry Trends