Solving your customer, risk, fraud and operational challenges in insurance

Spring means many things for different people. For some it’s the start of the baseball season; for others it’s daffodils, tulips and azaleas season.  For me, spring represents the start of the insurance conference season.  This year is no exception, and over the past couple of months I have attended several insurance events.

Kicking off the season, and in this case a few days earlier than the official start of spring, was the Celent Innovation and Insight Day, which I wrote about in this blog.  Up next was the SAS Financial Services Executive Summit, and for more about this event read this article. Later in April was the Insurance Data Management Association conference, as well as two Insurance & Technology roundtables on telematics.

A common theme throughout all of these events was data and analytics. However, as I spoke to delegates and customers at these events, they indicated that they are drowning in data but starving for information.  Those carriers who have implemented telematics programs are struggling to collect and analyze this explosion of “new” data. Other companies are battling to make actionable business decisions from their existing data. While some insurance executives do not trust the information in their legacy systems and data warehouse, and are considering data governance programs.

To better understand how insurance companies are using predictive analytics, analyst firm Strategy Meets Action launched a survey on the analytical lifecycle and operationalizing analytics. The results of this survey will be available later in the summer.

Finally, rounding out the season was the ACORD / LOMA conference in Las Vegas. SAS was fortunate to have three SAS customers speak at this event. Brett Starr from Cincinnati Insurance entertained the audience on the topic of creating an analytical sandbox with some great quotes including:  “actuaries are the Wal-Mart of data” and “insurers must be data gymnasts with the flexibility to stretch data in many different directions”. Mike Rowell spoke about how Alfa Mutual is using data to better understand customer loyalty and calculate customer lifetime value. Finally AXA Equitable’s Matt Christensen talked about how his organization is better serving their customers by using speech analytics to analyze the information in their call centres.

Spring is seen as the season of re-growth, and based on the optimism from these events, insurers are also sensing growth and expansion in their future.

I’m Stuart Rose, Global Insurance Marketing Principal at SAS. For further discussions connect with me on LinkedIn and Twitter.

There are many people who think that insurance is fast becoming a commodity, with little differentiation between products, and where consumers choose their insurer purely on the basis of price. However a cup of coffee is a commodity, and yet Starbucks can sell a cup of coffee for $4 or more. The reason for Starbucks’ success is often cited as the customer experience. Thus could an insurance company create a unique customer experience to differentiate itself from its peers?

Customer-centricity is not a new concept, but it has taken on increasing importance in today’s business environment, marked by empowered consumers who want to interact with a brand on their own terms.

For many organizations, the challenge lies in finding innovative ways to capture the “voice of the customer” and infuse customer insights across all business functions, from the point of sale to the call center, in order to create business value. But most insurance companies continue to be product focused, rather than customer or segment-focused.

So to create a customer experience that competitors cannot match requires three overarching elements:

• Having a holistic understanding of the customer
• Using that knowledge to define tailored products and communications
• Interacting with agents and customers more effectively, with more personalized service

Every interaction with a customer represents an opportunity to get data to support these goals.  Never before could insurance companies compile so much information about customers and markets, transform that information into predictive insights, and guide the investment of resources with precision.

To build an exceptional customer experience can be complex,  download the white paper “Six steps to an unmatched customer experience” to learn more about how insurers can create a more valuable customer relationship. It summarizes the key six steps that an insurer must take to be successful, which are:

1. Create a 360 –degree view of customer
2. Understand the customer better
3. Make marketing more efficient
4. Provide quality leads to agents
5. Manage the brand more proactively
6. Deliver a better real-time experience

Like Starbucks, whether insurance consumers are willing to pay an increased premium for exceptional customer service has yet to be determined. Though we know it does increase customer loyalty. One company mixing insurance and coffee is State Farm. They have created a concept called “Next Door” where customers can hang out, talk with Financial Consultants while enjoying a great cup of coffee.

I’m Stuart Rose, Global Insurance Marketing Principal at SAS. For further discussions connect with me on LinkedIn and Twitter.

The old adage “What comes first the chicken or the egg?” could easily be used as a metaphor for the analytical lifecycle.

Many will argue that data comes first. Insurance is a data-centric industry. Insurance companies collect data for a specific purpose or transaction via policy administration and underwriting systems, claims management applications, and billing and finance solutions. Data is rarely gathered specifically for the purpose of analytics. Instead, analytics becomes a secondary use  for data generated for another purpose.

However strategic decisions are made at the executive and board level to set the insurance organization’s long-term strategy. Hence business analysts will argue that that you must first identify the business problem. Start with the end goal in mind, i.e. the decision, and then determine the data needed to support that decision.

There is not really a right or wrong answer to the question “What comes first the chicken or egg?’; neither can really survive without the other.  Similarly, the analytical lifecycle should be considered a closed-loop process (see diagram).

This process consists of data preparation, data exploration and discovery, plus model creation and validation. Up next is getting the results to the right people at the right time, and learning from the results to refine the process. Hence for insurers to survive and thrive, they need both data and analytics.

To learn more on this topic download the white paper “Manage the Analytical Life Cycle for Continuous Innovation”

I’m Stuart Rose, Global Insurance Marketing Principal at SAS. For further discussions connect with me on LinkedIn and Twitter.

Much has been written about how the insurance industry is a laggard compared to many other industries, especially when it comes to technology. In fact I remember a 2010 report that surveyed the usage of social media in 30 different industries. Insurance came in 28^th, ahead of only Zoos and Funeral Homes. So it beat animals and dead people!

But things are changing. Over the past ten days I have attended two conferences that highlighted technology innovation within insurance.

The first event was the Celent Insight and Innovation Day in Boston.  One session I found fascinating was “What’s Next? Deliberate Insurance Innovation”. This session discussed how technology is reshaping the insurance industry. For example, a Japanese insurance company is using GPS information from a smartphone to trigger location based insurance offers, such as hole-in-one insurance if the insured was on a golf course, or travel insurance if the insured is at an airport. Another instance of how advances in technology are helping insurers is the usage of radio-frequency identification devices (RFID). These are being implanted into animals to track and identify livestock, thereby helping insurers rate and price farm insurance more accurately.

Technology innovation can come in many shapes and sizes. Commercial insurance company, CNA, was recognized as a Celent Model Insurer of the Year for their usage of SAS Fraud Framework for Insurance, specifically link analysis software for combating claims fraud.

The second event I recently attended was the SAS Analyst Conference in Steamboat Springs. This is one of my favorite events of the year, not just because of the location, but the opportunity to learn about new SAS solutions, most of which have applicability for insurance companies. SAS Executives spoke about how SAS In-memory analytics solutions are opening new opportunities for insurers in the areas of telematics and price optimization.

Insurance technology might not be as cool as “Google Glass” or “ Apple’s iWatch” but innovation is happening in the insurance industry, and faster than you would think.

I’m Stuart Rose, Global Insurance Marketing Principal at SAS. For further discussions connect with me on LinkedIn and Twitter.

Like many of my readers, I spent many hours traveling during the festive period. During one long car journey, I decided to play some “old-fashioned” games with my family, instead of having them stare at a TV screen or play endless videos games.  One such game was “20 Questions”.  For those of you unfamiliar with this game, one player selects a subject or object, such as a famous person, place, movie etc.; the other players then each take turns asking a question which can be answered with a simple "Yes" or "No." The players then have 20 questions to guess the subject.

Later during the journey when my children were back to watching their movies, it got me thinking, “What are the 20 questions that insurance executives should be asking in 2013”?

Here is my list:

1. How can I increase market share?
2. What products are competitively priced?
3. How can I maximize the revenue for a book of business based on price elasticity?
4. What is the average time from quote to policy issuance? By region, agent, underwriter?
5. What is my premium revenue by product and  region ?
6. What are my customers saying about us?
7. What is the customer’s next best offer?
8. Which customers are most likely to let their policies lapse?
9. How can I maximize campaign profitability given budget constraints, offer restrictions etc.?
10. Which claims are most likely to be subrogated or involve litigation?
11. How are my loss-adjustment expenses trending by region, product etc.?
12. What is the optimal adjustor allocation to maximize customer satisfaction and minimize claims severity?
13. What is the percentage of claims pending to claims processed?
14. Who is committing fraud, especially organized fraud?
15. How many referrals did our SIU team receive last month? How many were accepted vs. rejected?
16. How closely do our capital reserves match our risk profile?
17. What is our risk exposure to a catastrophe by region?
18. Who are my profitable agents?
19. What is the agent attrition percentage?
20. What distribution channel is the most cost-effective?

The answers to these questions will vary by insurance company, geographic region, line of business etc. However there is a common trait that links these questions – data and analytics - without them, insurers will not have the answers. To learn more about how analytics can help, read Analytical P&C Insurer or Analytical Life Insurer.

I’m Stuart Rose, Global Insurance Marketing Principal at SAS. For further discussions connect with me on LinkedIn and Twitter.

As the year draws to a close it is typical to think back over the past 12 months. As I was doing this exercise last week I began reminiscing about an interesting course I attended by SAS’ Legal Department. This course focused on what can and cannot be written in marketing collateral, especially regarding unsubstantiated statements.

So as I contemplate the successes of SAS in the insurance industry in 2012, my mind began to wander about that “grey” area of marketing and advertising.

How did Papa Johns prove “better ingredients, better pizza”?

Or my personal favorite from the 80’s, did Heineken beer really “Refreshes the parts other beers cannot reach”? If so, how did they prove it? (Those of you not familiar with this campaign check out this YouTube clip from one of their most popular commercials).

There are even claims that Santa Claus uses SAS. For evidence check out this YouTube clip.

Hence as I review SAS’ highlights from 2012. I have sufficient proof to state that:

• SAS wins innovation award for insurance fraud technology
• SAS is the leading vendor for data visualization and advanced analytics
• SAS named Solvency II Services firm of the year
• SAS continues to be best company to work for in US, France, Sweden, Australia, South Africa......

Does this mean that I have enough evidence to state that SAS is the Dog’s B******s or even the  Bee’s Knees? I will be contacting Legal next week to find out.

Finally, I would like to wish all my readers a Happy New Year and I am looking forward to spreading the word about analytical innovation in insurance in 2013.

I’m Stuart Rose, Global Insurance Marketing Principal at SAS. For further discussions connect with me on LinkedIn and Twitter.