Insurance Business Intelligence: Transforming the Insurance Sector

The insurance companies have always relied on a vast amount of data to evaluate and understand risks, get a clear picture of trends, calculate commissions for their brokers, and put their prices on policy plans. However, to get the most out of that data, they have to have a robust business intelligence plan in place.

This way, they can be able to leverage the data at their disposal to gain new insights and create more innovative insurance products, improve customer experience, and drive profitability. Below, we look at how the insurance industry stands to benefit by implementing business intelligence software.

What is Business Intelligence?

Business Intelligence (BI) is primarily a technology-driven process for collecting, managing, and analyzing data. It aims to deliver actionable information that helps executives and managers make informed decisions.

BI encompasses various functions, including data mining, performance benchmarking, and descriptive analytics, which collectively help organizations understand their operations and market conditions better.

The ultimate goal of BI initiatives is to improve business operations by leveraging relevant data. This can lead to increased revenue, enhanced operational efficiency, and a competitive edge over rivals.

Companies employing BI tools can translate their data into valuable insights that inform strategies and improve productivity.

Key Components of Business Intelligence Software:

• Data Collection: Gathering data from internal systems (like ERP or CRM) and external sources.
• Data Preparation: Cleaning and structuring data for analysis.
• Data Analysis: Running queries and performing analytics to extract insights.
• Reporting: Creating dashboards, visualizations, and reports that present the findings in an easily digestible format.

Insurance Business Intelligence Essentials: Understanding the Basics

Business intelligence (BI) is a suite of tools and technologies used to gather and analyze unstructured data and visually present it in the form of charts, infographics, and maps. With business intelligence software, insurance companies can effectively leverage the mountain of data at their disposal to gain new insights and create more innovative insurance products, improve customer experience, and drive profitability.

Its role is to provide valuable and actionable insights to facilitate better decision-making by key executives and decision-makers. [1]

Benefits of Business Intelligence in insurance industry

Measure the profitability of existing sales channels

Insurance companies use various mediums to sell their policy products. These include insurance agents, banks, independent consultancies, and their own websites or social media pages. They’ve also formed partnerships with tech firms to reach a wider audience. [2] But how profitable are these distribution channels regarding the level of business they deliver? And do the partnerships offer real value for insurance companies, or should they double up on their teamwork efforts or invest the time and money elsewhere?

Through business intelligence solutions, insurance companies can measure the performance of their existing sales channels by querying their data sets. For example:

• Which distribution channel has had the cheapest cost per acquisition in the last six months?
• Which distribution channel has raked in the highest revenues for the last year?

By gaining insights into the performance of their sales channels, insurers can better know where to focus their resource allocations and sales efforts.

Create smart insurance products

The product development pipeline in the insurance companies lags behind. [3] This challenge can only increase as far as customer expectations keep rising. From the customers’ perspective, they want products they can activate or deactivate, if need be, in real-time.

That being said, the insurance industry must adjust to a more sophisticated buyer with a wide range of needs and desires. To develop the right insurance product, insurance businesses need to leverage the data across different business functions to understand what’s working and what’s not. Business intelligence can help them query their business data and get answers to the following insightful questions:

• Which insurance products have the highest sign-ups for the last 6 months?
• What are the major health and financial challenges facing our customers over the last 5 years?

Gaining insights into these queries allows insurance businesses to understand the needs and wants of their customers. In the end, they can create an innovative product that addresses the consumer’s pain points.

Better customer experience

A great shopping experience is one of the most decisive elements when it comes to brand loyalty. According to the State of Connected Customer Report, 84% of customers mention that a firm’s shopping experience is equally as significant as its products and services. [4] This is why insurance companies need to adopt customer-centric models to stay on top of their game.

Business intelligence can help bring success to these efforts by unearthing the key problems facing customers and addressing them. The hotline calls and customer reviews on their websites, for example, present a goldmine of customer feedback data. With business intelligence, insurers can then interrogate the data to get answers to these questions:

• What are 3 major complaints from our customers?
• On average, how long does it take for a successful claim for our accident policy plans?
• How are customers interacting with the insurance company?

Answering these queries will allow insurance firms to work towards delivering a wonderful customer journey in the following ways:

1. Create an omnichannel experience. Consumers want the convenience of using different channels such as Websites, Emails, Telegram, WhatsApp, and Messenger to engage with an insurance company.
2. Create an automated payment service
3. Create personalized insurance plans
4. Simplify the claims process
5. Implement an AI-powered chatbot
6. Using less insurance jargon in communications and documents

Detect fraud claims

Insurance companies strive for fast and smooth claims handling as part of enhancing their customer experience. However, this process is always threatened by insurance fraud, with fraudulent claims taking up to $80 billion annually in the US. [5]
Insurance fraud involves any act intended to deceive the insurance process for the purpose of economic gain. It may be committed against the insurer by a policyholder, third-party claimant, or an insurance agent.

Insurance fraud cases typically entail one or more of the following scenarios:

• Inflating an actual claim
• Forging details on an insurance application
• Staging accidents
• Submitting claims for injuries or damages that never occurred or products and services never delivered.

Fraud claims have the insurance industry searching for a solution to identify and prevent the problem. Luckily, business intelligence solutions can help perform pre-emptive fraud detection.

Business intelligence in insurance industry enables companies to track data to understand the trends in claims. Because fraudulent claims often have unusual trends, any uncommon claim is flagged immediately and subjected to further investigation before payout. The technology can also pre-emptively pinpoint a high-risk applicant.

This way, the insurer gets to avoid a financial hit by identifying a fraudulent claim in advance. And consequently, they can offer low premiums and higher payouts to genuine customers, leading to increased customer loyalty.

Guide digital marketing campaigns

According to the 2019 Gartner Spend Survey, companies spend roughly 10% of their revenue on marketing efforts. [6] Of course, they expect results in the form of more customers, increased profit margins, and a competitive edge over their rivals. Business intelligence can provide data-backed insights to guide insurers’ marketing processes. With useful insights, they’ll be able to:

Read more about Business Intelligence in Marketing – Benefits

Understand their audience

The success of any insurance company’s marketing campaign depends on knowing who its customers are. Business intelligence tools can gather demographic information about customers from all marketing channels and present a clear picture of their age groups, preferred product lines, buying patterns, and more.

Give personalized offerings

Marketing campaigns must address each customer segment with a personalized offering. Business intelligence can help insurers tailor their marketing messages to address customers’ needs.

For example, an insurer could market its life annuity plan specifically to prospects with the highest lifetime value. They could also market short-term policy plans that can be activated and deactivated at any time to prospects under the age of 30.

Check their competitors

Insurance companies can also use business intelligence tools to get insights into their competitors and industry trends. Through third-party data, they can assess the marketing campaigns of their competitors and do a comparison against theirs.

Consequently, they can tailor their efforts to stay ahead of the competition by, for example, setting new prices, allocating more marketing resources to an abandoned marketing medium, or targeting an emerging demographic.

How Generative AI enhance traditional BI?

Generative AI is significantly enhancing traditional business intelligence (BI) solutions by introducing automation, personalization, and predictive capabilities.

Key Enhancements from Generative AI

• Automation of repetitive tasks
  Generative AI automates routine BI tasks such as data collection and report generation, allowing analysts to focus on strategic decision-making rather than manual processes. This leads to increased efficiency and reduced human error.
• Personalized insight
  By tailoring insights to specific business needs, generative AI can analyze customer behavior and suggest targeted marketing strategies. For instance, it can identify reasons for cart abandonment in e-commerce and recommend promotions to recover lost sales.
• Dynamic dashboards
  Unlike static traditional BI dashboards, generative AI facilitates the creation of dynamic, interactive dashboards that adapt in real-time to changing data and user requirements. This makes it easier for users to derive actionable insights quickly.

Final thoughts on business intelligence in the insurance business

The insurance industry handles tons of data in the form of policy applications, insurance purchasing, renewals, and claims processing. The importance of business intelligence in insurance industry lies in deriving valuable and actionable insights from collected data. They can then use the insights to enhance customer experience, detect fraud, create targeted marketing campaigns, and improve sales channel productivity. Do you want to know more? See our business intelligence services.

This article is an updated version of the publication from Aug 18, 2022.

References

[1] Nemati, H. (2005). The expert opinion: an interview with Emilie Harrington, Senior Manager. Accenture‟s Business Intelligence Practice‟s, Journal of Global Information Technology Management, 66-71. Accessed August 12, 2022
[2] Home.KPMG. Get the Most out of Your Insurtech Partnerships. URL: https://home.kpmg/xx/en/home/insights/2019/08/get-the-most-out-of-your-insurtech-partnership-fs.html. Accessed August 12, 2022
[3] Deloitte.com. Insurance Product Development Capabilities. URL:  https://www2.deloitte.com/us/en/insights/industry/financial-services/insurance-product-development-capabilities-modernization.html. Accessed August 12, 2022
[4] Salesforce.com. Changing Standards for Customer Engagement. URL: https://www.salesforce.com/news/stories/state-of-the-connected-customer-report-outlines-changing-standards-for-customer-engagement/. Accessed August 12, 2022
[5] Fortunly.com. Insurance Fraud Statistics. URL: https://fortunly.com/statistics/insurance-fraud-statistics/#gref. Accessed August 13, 2022
[6] Gartner.com. The Annual CMO Spend Survey Infographic. URL: https://www.gartner.com/en/marketing/research/annual-cmo-spend-survey-infographic. Accessed August 13, 2022