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Determining the Next Best Action in Insurance

April 24, 2013

What if insurance companies could simultaneously improve customer satisfaction, retain valuable policyholders and maximize cross- and up-sell opportunities?

To achieve these goals, insurers need ways to anticipate customer needs and determine the next best action for each individual customer. Analyzing customer actions or tracking important life events enable a company to offer new types of policies or new levels of coverage that match a customer’s current or future needs. This allows insurers to create a truly personalized, customer-centric interaction uniquely designed for each individual.

For example, a company could offer a discount on bundled auto insurance as a policyholder’s child nears driving age or recommend a convertible life insurance policy after discovering that the policyholder has been comparing types of policies online. Highly targeted offers can be automatically delivered via any channel, such as mail, email or the web, or provided to agents in real time at the point of customer interaction. Creating personalized offers helps improve customer sentiment and increase profitability as well.

Solutions for big data help insurance companies identify the next best action for customers. With the right technologies, companies can extract, integrate and analyze a large volume and variety of data in structured and unstructured formats, ranging from call-center notes and voice recordings to web chats and social media. Through that analysis, they can identify the most valuable customers and better understand their preferences.

For example, after several years of rapid growth, a large Korean nonlife insurer wanted to boost revenues by improving its competitive position. The company needed to enhance the effectiveness of its large, distributed network of affiliated agents by providing them with the insights and tools to identify opportunities and implement more targeted and relevant cross-selling offers.

Companies can utilize predictive analytics to determine the likelihood that a customer will move to a competitor, and then identify the next best action to retain the customer. Reporting capabilities from business intelligence (BI) solutions can present the targeted offer that the customer is most likely to accept. The insurance organization can deliver the offer in real time, through the most effective channel.

The Korean company deployed a comprehensive customer segmentation and market-targeting solution built on IBM technology. By applying analytics and predictive modeling to customer account data and transaction histories, the solution enables agents to conduct segmentation based on the probability customers will adopt complementary or higher-value insurance services.

By analyzing customers’ consumption of services, the company can optimize cross-selling strategies, fine-tune marketing messages and deliver targeted offerings. The insurer can more accurately predict which insurance products are the most appropriate for each customer. Offering the right mix of services improves the effectiveness and efficiency of the company’s sales force, while the more personalized touch helps agents forge closer bonds with customers, which enhances loyalty.

With enhanced information insight, companies develop a greater understanding of customer needs, better anticipate behaviors and deliver targeted offers in real time at the point of contact.

To learn more, read the white paper, “Harnessing the Power of Big Data for Insurance

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