Realistic Steps for Improving Your Return on Insurance Data
The insurance industry’s return on investment has reached its lowest levels in decades according to the 2016 Annual Report on the Insurance Industry by the US Federal Insurance Office. Primary causes include increased weather related events and increased competition that has exacerbated soft pricing, constrained profit margins and inhibited premium growth.
To survive and thrive, insurance companies must find new ways to economically compete for new customers while gaining more value from existing customers. This is a tall order when faced with legacy issues and internal competition for scarce resources. However, as shown in the FTI Consulting client example later in the article, rewards can be substantial for companies that have met the challenges. Examples of objectives related to increasing the value gained on customer data include:
- Anticipating and preventing customer churn
- Segmenting customers to allow companies to focus on the most profitable groups
- Identifying factors most likely to optimize acceptance of a new offer
- Pinpointing customers with a propensity to buy additional products or services
- Optimizing distribution and customer communication channels