Data & Analytics

12:49 PM
Chet Gladkowski
Chet Gladkowski
Commentary
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Point-of-Sale Analytics Key to Better Insurance Distribution

With traditional marketing channel response rates below 1%, the time is ripe for a disruptive paradigm to guide insurers' quest to capture new business.

Starting in the mid 1980’s, crude oil production spiraled downward till it flattened out . With no new sources of oil, predictions of economic and cultural ruin abounded. Then, with the advent of new technologies, once unthinkable resources became available and now fuel our cars, homes and businesses. Might technology be able to fuel an analogous resurgence in the insurance industry?

Chet_Gladowski_Chet_Glad_Enterprises
Chet Gladowski, Chet Glad Enterprises

The search for profitable new business in the insurance industry has hit a similar production wall. The pursuit of new business is as energetic as ever, perhaps growing even stronger through aggressive expenditures in advertising and technology. There is a near constant bombardment of ads on television and the Internet proclaiming that you can quote your own policy on-line or with the aid of a helpful 800 number. Technology vendors are proclaiming smart mobile devices as the next “promised land” of growth and profitability.

With a stagnant economy and saturated marketplace, opportunities for true new business are very limited. One company’s new business is another’s non-renewal. There are countless mail and email lists of “hot” prospects being bandied about the industry with similar sounding promises as those male enhancement emails and ads. In the words of one industry wag, “We are eating our own children as business moves from one carrier to another all in search of a $5 savings."

Traditional marketing channel response rates are all well below 1%. The numbers for online sites and SEO (Search Engine Optimization) are not much better, also below 1%. With the industry spending hundreds of millions for technology and advertising with a less than 1% response rate, the time is ripe for a new, disruptive paradigm.

While new policies are important to carriers and agents alike, there is another source of new business that to date has been largely ignored as being too costly to economically extract — cross-selling and up-selling. Both can bring great rewards to agents and carriers alike if it can be done effectively and at an appropriate cost point.

Through the use of automation, analytics and the Internet, you can piggyback cross and up sell offers to existing clients. Because you already know the client, their policy, payment patterns, claims experience and much more, you can intelligently select and make offers for up selling additional coverage onto existing policies in addition to cross selling new lines of business. By inserting clever and interesting insurance information into existing and new electronic communications, you can pre-qualify their appetite for additional coverage without costly human intervention. From this point, you can immediately offer the upsell coverage automatically through your portal or smart mobile device technology. Another option is to transfer this opportunity to a call center or their agency.

[Related: Nationwide CMO: 'I Have Double-Digit Million Dollars in IT Projects'.]

Companies, vendors and agencies alike can build this capability from scratch. However there are mature cloud offerings available that can get you up and running with very short/inexpensive implementation and integration projects. Such services can be accessed with no up-front license fee, on a Platform-as-a-Service (PaaS) model similar to SalesForce.com. Payment can be based on the total number of clients contacted but only on the pre-qualified leads they produce, i.e. you pay only for success. This pricing model is wildly different from lead lists, build your own or license models where you pay 100% no matter the results.

We thought that North America was running out of oil because there were no large oilfields left on land. With advances in technology, offshore drilling became a cost effective reality. With yet more improvements, cost effective extraction of oil from shale and sand has driven US oil production to 20 year record highs with projections that the US will become the world’s leading oil producer by 2017 .

There are similar “new business” riches waiting to be harvested within the insurance marketplace for those willing to leverage technology wisely.

About the Author: Chet Gladkowski provides consulting services to the insurance technology industry. He also writes, speaks and produces video blogs on important topics facing the intersection of insurance and technology to carriers and vendors.

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Oracle insurance BroL103
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Oracle insurance BroL103,
User Rank: Apprentice
8/18/2014 | 2:11:37 PM
re: Point-of-Sale Analytics Key to Better Insurance Distribution
Interesting more so for Africa where insurance uptake is still low
Anthony R. O'Donnell
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Anthony R. O'Donnell,
User Rank: Apprentice
3/19/2013 | 1:49:19 PM
re: Point-of-Sale Analytics Key to Better Insurance Distribution
Important point well made, though I would quibble with the oil analogy. In the case of oil, there are vast reserves of a commodity that are unreachable without advances in extraction technology. In the case of insurance, the customer is the commodity. However, it's not so much a case of there being vast untapped reserves of customers but rather better ways to get at them than your competitor might. The analogy is valid to the extent that there are customers who might see the value of having more insurance products. That's especially in the case of life insurance, where there is indeed an opportunity to reach many people who are inadequately protected, which is to say not protected at all.
Chirag
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Chirag,
User Rank: Apprentice
3/18/2013 | 6:46:30 PM
re: Point-of-Sale Analytics Key to Better Insurance Distribution
Lots of room to grow carrier/Agency/Broker books of business without the typical click-through arbitrage methods. Great point Chet.
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