Many people have written about the impact of the book "Moneyball: The Art of Winning an Unfair Game" by Michael Lewis not only on the Oakland Athletics, but also on modern businesses across industry boundaries. This book, which was made into a top-grossing film starring Brad Pitt, highlighted the real impact of analytics in shaping the success of a baseball team but it has applications everywhere.
Apparently, the analysis of hits, steals, walks and other factors can, and should, shape decisions on who to recruit, trade, play and who to play in specific positions or in which position in the batting line-up. The nerve of Billy Beane trusting actual hard numbers over the gut feelings of the team’s scouting staff, right? Today, the use of analytics to provide insight and shape business decisions continues to be one of the most consistent top priorities for businesses alike, including insurers, and rightly so.
In insurance, just like in baseball, there are certain factors that can shape success, including which customers to market to, what products and services to offer, and what geographic areas to sell in. And, customer demographics, including geographic location data, are becoming increasingly important due to recent devastating and record-setting severe weather events.
While it is impossible to predict weather or catastrophic events with 100 percent accuracy, insurers can use data, technology, analytics and services to help analyze risks, prepare catastrophe management plans to respond and where possible have risk and claim prevention plans and solutions in place. With the extreme weather and spring and summer catastrophe season beginning, what should insurers be doing today to prepare and respond for the future?
First, insurers need information in order to prepare and respond to an event swiftly and effectively. This is the proverbial “moment of truth” at which point an insurer can gain a customer for life, or lose a customer in an instant by relying on business analytics to identify customers who could be, or who were impacted by the event. This allows insurers to proactively communicate with customers about what they can do to either minimize their risk or to let them know help is on the way.
Second, having in place a catastrophe plan that will ensure responsiveness from first notice of loss (FNOL) calls to deploying adjusters or providing access to repair services is critical to maintaining service excellence during a difficult time. When catastrophes occur, the need for precision, responsiveness, service and speed can help insurers meet policyholder needs, demands and expectations, cost effectively. Customers will respond with loyalty when there is great service! Further, it is an opportunity to reinforce the value of the company to the policyholder, and to prove the company truly is customer sensitive and future-ready.
Third, insurers can reshape their risk environment to focus on claims prevention. Analyzing data to gain greater insight into risks for specific customers will enable insurers to more directly influence behavior and help customers avoid claims. In such an environment, instead of reacting to risk, insurers can proactively communicate with policyholders to discourage activity that is likely to result in claims
Most insurers have focused on and built strategies around each of these areas in isolation.
However, pairing them together would enable P&C insurers to innovate, gain broader and deeper insight to help spot trends, assess, rate and write better risks, improve customer service, develop new products, optimize distribution channels, sell more effectively, manage the full customer relationship, manage the supply chain including adjusters more effectively, lower the costs of claims all based on using faster and more accurate decision-making analytics tools.
While we cannot avoid risk, imagine a time when we cannot only manage risk while servicing clients, but more importantly decrease or eliminate risk by using data and collaborating with our customers … winning in an unfair game with Mother Nature.
Denise Garth is the executive vice president of strategic marketing and industry relations, and global head of market strategy for Innovation Group North America. She can be reached for further comment or information via email at garthd@us.innovation-group.com
