Insurance Industry Benefits from CRM
The Insurance Sector Has a Special Relationship with Customers.
May 8, 2009
The insurance industry was one of the first major sectors to adopt data warehousing and CRM when these corporate solutions were first introduced and promoted as effective technologies and methodologies, for managing customer relationships where very large customer bases are involved.
Benefits of the Data Warehouse
Significant benefits have been achieved in managing relationships and in enhancing service to insurance industry clients, as well as to improving the corporate bottom line, for those organizations which adopt effective CRM strategies. These benefits have been achieved in several areas, including:
- Product Pricing
- Impact of Pricing Changes
- Reserves
- Reducing Fraud
- Identification of Providers
- Analysis of Geographic Clustering of Risk
- Analysis of Agent Sales
Pricing Products
The price of insurance products is based on a number of factors. For example, life insurance premiums are based on personal information including: client age, location, current and past health condition, smoking or non-smoking. Similarly, automobile insurance is based on type of vehicle, driving record, location, mileage driven per year and similar information. The insurance company's data warehouse enables agents to establish the most significant factors to be considered for setting the price of an insurance product to cover losses, including underwriting factors, and deciding whom to insure at what cost.
Another benefit of the data warehouse is that it provides the opportunity to assess the impact of proposed pricing changes on each client for use in the filing of rates with insurance regulatory commissions, and to communicate proactively with clients to improve retention after rate increases. Based on product profitability, a company can also track good agents who improve the bottom line.
Reserves and Fraudulent Claims
Deciding on the reserves to be maintained in liquid investments to cover potential losses, is information required by every insurance company to meet government regulations. For example, insurance companies which provide worker compensation are able to reduce reserves significantly, by using an eight-way segmentation criterion, while increasing confidence that the reserves would cover potential losses.
Fraudulent claims are a recurring problem in the insurance industry, particularly in the healthcare and automobile insurance fields, and Identifying patterns of fraud to reduce the cost of false insurance claims is a valuable resource which the data warehouse can provide. Masses of claims information gathered and stored in the data warehouse can be analyzed using analytical tools, to detect patterns of fraud.
Controlling costs, improving client satisfaction and reducing recurrence of injury, are three other benefits provided by analyzing data, enabling insurance companies in the healthcare sector to identify low cost, high-quality healthcare providers.
Natural disasters – hurricanes, earthquakes, tornados, etc. – can be analyzed to more effectively sell off risk through re-insurance and to prevent catastrophic losses from single events
Building on the data warehouse and other technologies provides insurance companies with the capability to manage client relationships effectively, reduce costs and increase profitability, as well as meeting the regulatory requirements of the industry sector. At customer touchpoints, better customer service results, with subsequent enhancement of three important customer parameters: satisfaction, loyalty, and retention.
 |
