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December 6, 2022

How to Take Advantage of Data in Insurance This Year

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Success in the property and casualty (P&C) insurance sector depends heavily on unpredictable events and the ability to provide high-quality products and services while maintaining competitive prices. Unfortunately, intense price competition can make it difficult to make a profit. Insurance agents can improve processes to cut costs and increase profitability by properly utilizing insurance data.

Data collection has always been used in the insurance industry to provide customers with products that protect against risk. However, new technology can provide agents and brokers with insurance data to improve underwriting processes and identify trends that predict future events. This is vital for P&C agents to identify risks and develop new product lines to increase their competitiveness in the market.

Here’s how to take advantage of data.

What Is Insurance Data?

To effectively provide consumers with high-quality insurance products and make a profit, insurance agents must understand individual customer behavior and assess risks related to each customer. This is accomplished through the use of information or data collected during interactions with each customer. Modern technology allows insurance agents to collect data automatically through insurance application interfaces (APIs)from multiple touchpoints.

Insurance data includes the various types of information collected from customers, economic data from federal agencies, and current data that helps define global trends. This data is collected from multiple touchpoints and resources to streamline insurance agency processes and improve customer service.

What Makes Data Valuable in the Insurance Industry?

Insurance is a highly predictive industry requiring providers to make educated guesses about the needs and behavior of insureds. Outside factors like the economy, natural disasters, and global trends can also affect such needs and behaviors.With modern data collection andinsurance data processing methods, insurance agents and brokers can access and use more data to improve predictions. Digital data collection through anAPI like InsurGrid, allows insurance professionals to collect data in seconds and implement analytics that can drive insights into potential improvements. Data analytics improves insights on new markets, competitors, clients, risks, laws, etc., to enhance predictive analysis.

How Is Big Data Assisting the Insurance Industry?

Big data refers to large volumes of data and the tools and processes used to collect and manage it. Digital data collection has allowed for collecting and storing large and diverse amounts of information that can be used to improve insurance processes and reduce risks for P&C insurance agents and brokers and provide consumers with the best possible coverage at the cheapest possible price.

These are some of the most effective ways big data is used in the insurance industry.

Predictive Analysis

The use of data allows insurance agencies to collect data from various sources that can help agents better predict the behavior of insureds for more accurate underwriting and risk reduction. For example, telematics allows insurers to collect real-time driver behavior and usage data to provide premium discounts and usage-based policies. The use of data improves predictions so agents can meet customers' needs without taking on substantial risk and become more competitive as a result.

Enriched Customer Experience

The claims process is arguably one of the most important insurance processes for customers. By utilizing data from various sources, insurance agents and brokers can streamline the claims process by quickly resolving issues and paying claims in a timely manner.

Fraud Identification

Insurance fraud results in substantial losses for insurance companies. Unstructured data like social media postings, pictures, and recorded interviews can be used to help agencies detect fraud. When insurance agents and brokers can automatically collect data from various sources and utilize algorithms to analyze the data, fraud patterns can be more easily detected.

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Securing Digital Data

While data collection can work to vastly improve the sales process in the insurance industry, maintaining consumer privacy is a critical responsibility. For any company that collects sensitive personal or business data, it's essential to have protections in place to ensure data security.

Using technology to collect, store, and share data must include features to secure information from potential breaches. Other types of protections can help businesses recoup financial losses in the event data is compromised.

What Is Cyber Insurance?

Cyber insurance (also called cyber liability insurance) is a type of protection that can help protect businesses against financial losses resulting from a cyber attack. Cyber liability insurance provides coverage for the losses related to the breach of your data network.

Such losses include data destruction, ransom payments, online theft, and repair costs. The coverage also provides financial compensation for lawsuits against you related to a cyber attack.

What Is Data Breach Insurance?

Data breach insurance covers losses related to a breach, hack, or theft of company documents. The policy is designed to cover immediate expenses resulting from personal or company information loss.

Most data breach policies only cover notification to affected customers, an investigation into how the breach occurred, and costs related to income losses for downtime. This coverage can also provide access to assistance hotlines and credit monitoring to affected parties.

What Is the Difference Between Cyber Liability Insurance and Data Breach Coverage?

Data breach coverage is first-party coverage that only addresses costs associated with data loss. Cyber liability insurance is a standalone insurance policy that addresses the costs of most cyber incidents. It goes beyond the expenses of first-party data loss to help organizations recover from an attack with the lowest possible impact. Cyber liability also extends to third parties affected by the attack, including customers and business partners (pays legal fees, settlements, and regulatory fines).

Why Businesses Need Cyber Liability Insurance or Data Breach Coverage

Cyber attacks target companies of all sizes in all industries. In reality, most organizations don't have adequate resources to prevent an attack. Even with substantial security, hackers can find new gaps or trick network users into downloading malicious software.

To protect against financial distress related to an attack, organizations need a form of insurance that covers data compromise.

Protecting Your Network

While cyber liability insurance and data breach coverage are designed to help companies deal with the costs incurred from a cyber attack or data breach, these policies aren't designed to prevent attacks.

This is why it's essential to implement practices to secure data effectively, such as:

  • Develop a strong cybersecurity posture using comprehensive firewalls and antivirus protection.
  • Educate employees about common cyber attacks like phishing.
  • Put policies in place to improve cyber security, like strong password requirements, two-factor authentication, and rules regarding personal emails.
  • Question third-party partners about how they encrypt data to keep it protected.

How Your Agency Can Benefit From Insurance Data

Data is one of the most valuable assets an insurer can have. The more data you are able to collect from your clients, the better coverage you are able to provide for them. This alone will give you a competitive advantage.

When insurance companies can utilize digital data from various sources, they have more insight into customer behavior and the external factors that affect insurance claims. Gathering more insurance data can provide your agency with the following benefits.

Improved Customer Acquisition

Converting leads into customers in the insurance sector is a complex process requiring significant customer information. Without the right information on hand, you run the risk of providing an inaccurate quote or failing to recognize important risk factors.

By utilizing a convenient data collection method that gathers all your customer's information at once, you can streamline your customer acquisition process to eliminate customer hassle and convert more leads. For example, an API insurance platform allows you to receive insurance policy data in a structured and customizable way that accommodates any workflow. Instead of dealing with complex forms, emails, and phone calls, your customers can simply connect their online accounts to share policy data.

Accurate Risk Prediction

Underwriting is a complex task that takes time and can result in losses for insurers. Insurance data provided by potential customers can be misleading as consumers seek ways to get lower rates. However, collecting all data necessary is more direct and can provide valuable insights that help P&C insurers accurately predict risk.

Identifying Potential Markets

Insurance agents and brokers rarely depend on a single product to stay afloat. Consumer needs change frequently, and insurers need to identify new products to market to new and loyal customers.

When customer data reveal behavior patterns and characteristics, insurers can clearly define the best areas to target their marketing efforts. By using social media to collect data, insurers can identify potential markets for business growth.

Insurance Data Enhances Insight for Agents and Provides Convenient Processes for Customers

Providing customers with the policies they need and coverages that actually fit the assets they have is no easy task. However, implementing technology to collect all insurance policy data needed from your clients at once will simplfy the process. P&C insurance agents meet further challenges with steep industry competition and changing consumer expectations.

The ability to collect and process data provides many benefits that can improve processes for insurance agents and attract more clients. Start your free trial with InsurGrid to see the power of insurance data in action.