Do you also ask yourself: how would the insurance industry use business intelligence? Traditionally, this particular industry only relies on actuarial science. This is a field of discipline that utilizes data analytics and models in predicting risks. This was first created in the 1600s, along with the first life insurance policy and pension fund.
For insurers to know what amount of money they need to allot for the death benefit, they need to find a way in estimating risks and mortality.
In the 1700s, the same risk management principles, models, and calculations are used by property insurance providers to cover physical objects such as a house. The risk managers and actuaries in the early days are the first to be considered as data scientists. But with the advancements and the existence of business intelligence, these days bring many benefits to the insurance industry.
Read further to know useful BI is for insurance providers.
Uses Of Business Intelligence To The Insurance Industry
Business intelligence improves the way things are done and improves predictions for risk management and underwriting. Furthermore, it is also a helpful tool in serving the customers, making better financial decisions, and reduce fraud.
Below are the different ways on how would the insurance industry use business intelligence.
#1. Customer insight
If insurance companies understand how customers make decisions, they would be able to attract more customers and retain the existing ones. To illustrate, below are some examples. In addition, different business intelligence tools are allowing decision-makers to have a clear vision on which sales channel is struggling or performing well. With this, they would determine if the particular performance is driven by the product, audience targeting, or advertising.
This is also helpful in extracting and interpreting data from wide sources, including online shopping portals and social media platforms. If the insurers have improved insights about customers, they would be able to personalize their product offering and reach out to more people with valuable and timely outreach.
#2. Underwriting and risk management
In the past, insurance providers have quite a reputation on how well they keep plenty of data about claims and customers so that they would be able to support any risk management decision and underwriting to be done in the future. Despite that, today’s business intelligence tools help insurers have better predictive models and data visualization so that information received will be improved even more.
Since the insurance providers can access better data analytics and information, then they would be able to set premiums that are not too high to overcharge customers yet not too low for them to earn enough profit.
Most individuals and businesses rely upon insurance providers not only for the policies but also in helping them to manage risks. Injurers can also use different BI tools in serving customers even better. It is good that an insurance company can pay for the claims, but it’s even better if the insurance company can help the clients avoid getting claims. In such a case, the insurance companies can lead in terms of using, reporting, and storing data.
#3. Service and distribution
Understanding customers better also help insurance providers to find a better way on how and where they should open new distribution channels to serve existing customers and sell policies. Again, this started from the desire to serve younger generations who tend to obtain, buy, and compare services online.
As a result, service portals and online sales can combine information from the different CRM systems and help agents and carriers in gathering more data so that their intelligence systems will be fed with relevant data.
#4. Fraud detection
Based on a report, the insurance industry suffers about $70 billion per year for fraud costs. The insurance providers are covering those fraud costs from the premiums paid to them. As a result, families are charged with a higher amount of premiums per year.
But if fraud is detected early, then it will reduce fraud cases. This, in turn, will lead to higher profits for the carriers, which also means more savings on the part of the customers. Business intelligence is among the weapons used in targeting irregular activities that need to be investigated.
#5. Claims handling
Handling claims is regarded as an essential thing that an insurance company does for customers. Therefore, all insurance providers must practice fair and prompt claims handling. Not only that, but they should work in the most efficient way possible and process claims quickly so that they can payout for the benefits within the terms of the insurance policy.
In doing their job, claims processors and adjusters have to sort of or use the information daily. But with the help of business intelligence, insurance professionals are given vital tools that they need in making accurate and confident choices quickly and in keeping a customer satisfied at all times.
It’s A Wrap!
Aside from the things mentioned above, many other things can answer the question: how would the insurance industry use business intelligence. The customers have also benefited from this.