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Dear Annie Analytics: Can I revitalize my relationship with my policyholder?

Analytics Advisor, IBM

http://www.ibmbigdatahub.com/sites/default/files/dearannie_insurancex_blog.jpgDear Annie Analytics,

How can I help my customer?

My customer and I have been working together for nearly ten years now, but I think they are taking me for granted and our relationship isn’t what it used to be. We used to be friends, and I keep writing them letters with nice things and new offers but they never reply. Have I done something wrong?

I just can’t understand it. I’ve cut my prices to the bone—in fact, I think I might even be losing some money somewhere but I’m not quite sure exactly where. And I keep having to hold capital against product lines that aren’t making me any money, which doesn’t make sense to me.

And then, on top of everything else, I have a sneaking feeling that I’m being cheated. That story about the stolen camera was a bit rich, but it didn’t seem to warrant spending money on investigating it. But I’m worried that if they think they can get away with it once, they’ll do it again.

All the other insurers seem to be so much more advanced with their thinking, it’s as if they have better insight into their business than we have. Do you think they’re doing something different?

I’m very worried—what can I do?

– Worried in Texas

Dear Worried in Texas,

What you describe sounds like a very dangerous situation. Your letter highlights your customer’s behavior in worrying detail. It indicates that the problem has existed for some time, is happening with increasing frequency and could cause significant harm to you and your customer.

I’m surprised that your customer never replies to your offers. Are you sure you really know what they want, and how they prefer to be contacted? I don’t suppose you have annoyed them in some way—maybe by pestering them, or giving them something they already have from you. Don’t you know that you can use predictive customer intelligence to understand them better?

It’s critical that you get your finances under control. Financial performance management tools can quickly help you, and then you can decide whether it makes sense to carry risk capital against products and lines of business that are unprofitable. And it will help you make decisions about your business based on your appetite for risk.

One big way to lose money is by your customers cheating you. Fraud losses go directly to the bottom line, so you have to get this under control. You can use the experience of your investigators to help set up counter-fraud solutions that will improve your detection rate. It’s worth its weight in gold and it will pay you back in no time.

Don’t worry about your competitors; it’ll all be fine if you get your own house in order. Insurance nowadays is far too complex to be managed by intuition. Believe me, once your people have access to better analytics, they’ll be calling out for more.

– Annie Analytics