It’s no surprise that data insights are transforming the insurance industry. In fact, something colloquially known as the “Fourth industrial revolution” is taking place all around us, with many aspects of this revolution revolving around data analytics, machine learning, and applied AI. All of these can and are being used by major players in the insurance world to reimagine growth, underwriting, pricing, and more. While these analytics systems are becoming increasingly sophisticated and robust, the data input into these models often falls behind in quality and scope. You get out what you put into your modeling and if you have bad or incomplete data the output is going to be misleading, unfinished, or just plain wrong. It is vital to be able to input good, clean data from multiple perspectives when making important decisions for your organization.
Bad data is a massive pitfall you want to avoid. According to a study by IBM bad data costs US companies an estimated 3.1 trillion dollars a year2. This is due to the cost of both cleaning data and using bad data in analysis and decision making, and it also includes decisions made with simply incomplete data. That’s almost an absurd number it’s so high, but it just shows exactly how costly it can be to not have the right data. When analytics rule decision making, your data has to be able to answer any question you put to it.
Now if bad data can cost you revenue, what are some benefits of using powerful data? This is data that is clean and accurate, and with enough of it to ensure an accurate output. Analysis of this kind of information leads to growth insights, areas and lines of business to pursue or adjust, and creates an intimate knowledge of the insurance industry and your customers. Use analytics to improve your customer-centricity, help pricing premium decisions, or determine profitability. Having the right information is the difference between increasing your customers’ satisfaction while maximizing your profit or missing a key element and causing headaches for your customers or expanding into an area without a competitive advantage.
You also want data that allows you to analyze your position and priority in markets against other carriers, demonstrates areas for revenue growth potential, and is detailed and specific. Often, data sources that are your own internal sources can lack perspective on the market around them. With data that provides a full picture, you may discover areas for growth, new agency partners, or new business that you haven’t ever had the opportunity to submit a quote or pricing for. With a greater perspective, you can gain a greater understanding of risks, your targets, and how to maximize revenue in a given space. As long as outside data is reliable, easily portable, and sortable it is able to better show what competition is present and a truly accurate picture of where business is being placed and for what price.
Avoid the pitfall of bad data, and increase your profitability and growth with good data. Analytics and insights are vital to gaining competitive edges in a market but are useless without the right data input. Grow your business, increase your pricing effectiveness, and gain a comprehensive view of the industry with the data you want.
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