Deep Dive into Data

Big data is big news across the corporate landscape, a growing mass of facts and figures providing extraordinary insight into businesses, markets and even competitors. Collecting and analyzing this data holds the promise of quicker, more informed decision-making for all sorts of purposes, particularly sales and marketing tactics.

While many large enterprises, including major insurance carriers, have invested in business intelligence and other predictive modeling tools turning data into information, insurance agencies are just beginning to glean the value of this digital alchemy. “Agents have a ways to go,” says Chuck Blondino, northwest region marketing director at Safeco Insurance, a member of the Liberty Mutual Group. “By and large, they are small to midsized businesses headed by a principal wearing 15 different hats.

They tend to do what they do today to sell policies, and then do the same thing tomorrow.”

Many agents agree. “As an industry, we are just not doing a good job leveraging business intelligence to capture new business or even identify who this new business might be,” says Claudia McClain, president of McClain Insurance Services.

McClain has a personal mantra when it comes to selling insurance—“Know your numbers.” As she explains, “If our team is constantly aware of our goals and our performance toward these goals, we will be more successful. What gets measured gets done.”

In this quest, the agency posts key metrics on a whiteboard in its meeting room at agency headquarters in Everett, Wash. Each week, personnel review where the agency stands in relation to achieving the various metrics, such as: policies in force, total clients/households, number of new clients/households, number of policies per client, average premium per policy/client and other statistics.

This data is gleaned from the agency’s management system (Hawksoft), and supplemented by Excel spreadsheets that she and her team have developed through the years. “How else can we know if we’re moving forward or backward?” McClain says. “The knowledge of numbers helps us set meaningful production goals as a team. I then incentivize the outcomes we want with individual and team bonuses.”

The optimum achievement is what McClain calls “The Perfect Month.” To achieve it, an individual must hit multiple production targets (the aforementioned metrics) in a single month for a $500 bonus. Agents are further incentivized for referrals and cross-sales; and each time a client’s existing liability coverage, such as underinsured motorist or medical payments protection, is increased, bonuses are also distributed.

The ability to slice and dice data from its existing book of business has become an agency crusade. “Once we know a customer does not have earthquake insurance, umbrella protection, life insurance or wedding coverages, we can then customize our marketing to them,” McClain says. “We’ve even used our management system’s reports capability to identify mailing lists of drivers over age 55 who would benefit from the free defensive driving classes we offer.”

More recently, the agency has implemented a tool called PropertyEdge that provides a customized risk assessment of a home with respect to wildfires, floods and other hazards. “We then send the report along with our recommendation to buy a niche policy addressing their greatest exposure,” McClain says. “Information is king here.”

You Can’t Manage What You Don’t Measure

Lisa Parry Becker is among the few agents tapping technology to turn data into useful information for sales and marketing. She is quick to point out that she has an advantage over many of her peers—a college degree in database marketing. “Slicing, dicing and analyzing data just seemed to make sense to me as a key way to grow business,” says Becker, vice president of family-owned and operated William B. Parry & Son, Inc., in Langhorne, Pa.

She took to the task initially by focusing her efforts on rounding out accounts. “It costs six times as much to write a new piece of business than working on building business with existing clients,” she explains. “Moreover, every additional policy you write [for a single customer], your retention rate goes up, as does your revenue.”

Becker built a database at the agency to collect and store diverse statistics on customers, which she then imports into Excel spreadsheets for analysis. One data set, for example, involves customers with personal automobile insurance who have not maxed out their first-party benefit coverage limits. “We run a search in our management system to find everyone’s first-party limits, then separate out those without the maximum,” she says. “Then, we tailor a marketing campaign specifically to these individuals. This was not just about additional revenue for us; we believe they truly needed the higher limits.”

Recently, Becker ran a similar program to determine which clients had less than $1 million in automobile liability limits, specifically focusing on those who had reduced the limits in the aftermath of the financial crisis. Another pinpointed customers without water backup coverage in their homeowners insurance policies.

“This is not brain surgery,” Becker comments. “You can use most agency management systems to produce simple reports, such as clients with auto and home coverages but no umbrella insurance. The more granular this information, the better the marketing can be tailored.”

The cost of business intelligence tools might be a factor in the overall tepid interest in big data industry-wide, although there are ways to dig data out of many agency management systems without forking over a fortune. Another reason may be the time it takes to analyze the collected data to discern the import for sales and marketing. Nevertheless, competitive pressures will compel agencies to evaluate the potential.

McClain points out that direct carriers are increasingly investing in data analytics. “They have systems that can pull all sorts of public records like motor vehicle reports, CLUE reports, property records and fire protection classes into a database,” she explains. “For instance, they know how many cars are registered in a household, which then makes the sales process go that much smoother. We, on the other hand, have to keep the client on the line while we wait for county records to load. We can do much better.”

The potential for significant business growth and improved customer relations brought about by data analytics technology is expected to encourage deeper investments in the future.

“This is one area where agents can knock the ball out of the park,” says Jeff Yates, executive director of the Agents Council for Technology. “With data analytics, you can measure what types of marketing campaigns are working and which ones aren’t. This is the next level from a marketing standpoint where agents must go.”

Fortunately, there are encouraging signs on the horizon. Several agency management systems now have inputs permitting integration with BI tools.

Carriers like Safeco, Chubb and others with powerful predictive analytics technologies are wielding them on agents’ behalf, pointing out where a customer might need an additional insurance policy or enhanced coverages. And a few intrepid agents are diving deeply into customer data, building databases and charts of metrics to pinpoint where best to invest scant marketing resources.

Much of this data, says Yates, is within easy reach of agents: “Most agency management systems can produce all sorts of metrics, but agents have to take the time and effort to dig them out.”

Building more credible metrics is one of the goals of ACT’s Business Intelligence Workgroup, which seeks to help agents leverage technology to determine which customer groups are most likely to buy particular sets of products from them.

“We don’t have the level of sophistication yet of an Amazon, which has this down to a science, knowing all sorts of stuff about its customers,” Yates says. “Right now it’s been slow going. But, that doesn’t mean we can’t grow and learn. Hopefully the tools will get better, less expensive and more user-friendly.”

Large agency management system vendors like Applied appreciate ACT’s objectives for agents to extract useful information on current policyholders to cross-sell and round out accounts, but few agents are clamoring for these functions. “Our system is uniquely formed to permit agents to integrate BI tools, but we’re just not seeing many agencies doing it, other than a few,” says Mark Layden, chief operating officer at Applied Systems Inc. “To be honest, agencies are still at a nascent stage.”

Nevertheless, he is confident this interest will grow. “The insurance community tends to be fast followers,” Layden says. “With more agencies moving online, I think in the next two to three years we will see this truly begin to catch on. It already has among many large and regional insurance companies. On the carrier side, data analytics is vitally important for underwriting purposes, as well as risk management, pricing and marketing.”

Much of the data analytics undertaken by agents involve current customers, but what about prospective ones?

Large carriers are reaching out to potential policyholders by acquiring demographic data. Chubb, for instance, partners with a large data analytics firm that provides granular information on 165,000 U.S. households. “We learn things like the magazines people subscribe to, who they bank with, the credit cards they might have and so on,” says Fiske. “Then, we drill down into our existing book to find people that these prospective clients match up with. Once we have this information, we know their propensity to buy certain coverages, and can customize the marketing toward them.”

Agencies can do the same thing, albeit at a significant expense for the time being. Nevertheless, there are cost-effective marketing tools that won’t break the bank. For example, once agent Chad Davis determines which of his customers are without certain insurance coverages or appropriate limits of financial protection, he relies on an inexpensive tool dubbed CallFire to contact them via telephone. The tool uploads the person’s name, address and phone number, automatically dials up the individual and then leaves a personalized message prerecorded by Davis or other agency personnel.

“It knows when the call will go right to voicemail,” says Davis, founder and president of Urbandale, Iowa-based Indemnus. “There is no wait period like you hear when a telemarketer calls you. We’re able to literally make hundreds of phone calls in a day, with one person on the staff staying on top of it—in case a live person picks up.”

Blondino says all agents should be kicking the tires of what is available to improve their sales and marketing campaigns. Not all of it is expensive, either. “Here’s the big one, and it doesn’t cost a dime—whenever a call or email comes into the agency, simply ask, ‘How did you hear about us?’” he says. “Now you know something valuable that you did not know before.”