Data analysis and its impact for insurances pt.1

The unstoppable digital transformation landed in a wide variety of industries, making them learn from data analysis and its benefits. This is a breakthrough without borders for the insurance industry, which, although it was not prepared for this metamorphosis, has a thousand and one opportunities.

The insurance industry is a competitive scenario among companies, where they seek to attract the clients of those competitors who have not adapted their businesses to the new needs.

If there is one thing we can say for sure, it is that today’s consumers demand new practices and tools to improve their experience. It is therefore normal that there is a flight of customers to companies that do offer immediacy, technology and modernization.

  1. Decisions based on data analysis: more effectiveness and lower costs:
 What does this mean?

Transforming data into information to generate knowledge and, in turn, optimize intelligent decision making in business, is a necessary and appreciated tool, because:

It allows us to measure the effectiveness, efficiency and consumer satisfaction in every interaction.

According to the article, it is known that currently, data is the gateway to the development of new products and services. In the case of the insurance industry, data analysis makes it possible to categorize users and identify what type of services to provide to each of them according to their needs.

Seeking support in machine learning will enable insurance companies to accelerate the risk assessment of a potential policyholder, which is a differentiating factor.

Machine learning techniques support the decisions that underwriters must make:

  • Establishing a risk scoring of the new contracting: in this way, the necessary precautions can be taken in the case of a customer with a high risk of suffering an accident, for example. Also to avoid fraudulent applications.
  • Defining the variables of greater weight in the valuation of a service with the possibility of risk, without falling into an eventual loss.

This results in reduced costs and improved effectiveness of the insurers’ services. This also offers competitive prices in the market which, in turn, makes it easier to cover indemnities.

  1. Customer retention and capture

This point is very relevant because, as we mentioned in the introduction, industries face the great challenge of keeping their users loyal in a competitive and changing environment.

Specifically in the insurance sector, the increase in competition and the emergence of insurtech companies (with lower costs and faster processes than large insurance companies) have led to an increase in customer churn in recent years.

Did you know that incorporating new clients costs up to three times more than retaining current ones? That is why it is essential to anticipate the eventual loss of our clients and proactively seek to retain them.

  1. Crosselling and upselling: customer acquisition

The insurance industry has resorted to these two techniques to attract new customers and retain current ones, which favors the personalization of offers.

To achieve the success of these strategies, it is essential to take Big Data into account.

There is still more! Stay with us! We will soon upload the continuation of this interesting topic.

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