Why Back-Office Data and Analytics Should be a Priority for Insurance Carriers

I recently saw an article on Digital Insurance that said insurance companies are struggling to manage analytics teams. The author said that over the past few years, many insurance companies have created centralized big data, data measurement, and data governance strategies and capabilities.

While I’m sure the author did his research and found a number of insurance companies that have created analytics teams, we actually aren’t seeing the same thing in our experience. At least not to the degree the article represented it.

In our experience, analytics have not been a comprehensive priority for insurance teams. They’re used in certain functional aspects, but not broadly across an organization. To the author’s credit, he notes that marketing and customer analytics have been the focal points of most data programs by insurance companies. That is true, from what we’ve seen. We’ve also seen a good number of companies implementing data programs that try to predict occurrences that can affect insurance claims, such as weather and natural disasters.

We haven’t seen many insurance companies focusing on analytics around back-office data. This seems like a huge missed opportunity. There’s a lot of information that can be gathered from back-office data and applied to the business to cut costs or improve efficiency.

A great example that we touch on a daily basis is document output associated with policyholder communications. 

Many insurance companies are collecting, managing, and analyzing what I’ll call front-end data - any data that comes from a direct interaction with a policyholder. If you’re using digital methods of communication, this could be an open rate, click rate, app download, or number of log-ins to name just a few metrics. If you’re using print and mail as your primary communication method, maybe you’re tracking mail returned to sender or number of mailed responses from policyholders.

But how are you measuring the back-end or back-office data? There’s a lot that goes into policyholder communications that doesn’t actually touch a policyholder directly, but still has a significant impact on your business. Let’s use print and mail output as an example because the ongoing costs tend to be higher than those associated with digital communications output. How much are you spending on postage? How is the size and length of your policies affecting your postage costs? How about the size of your envelopes? What about how you’re prompting policyholders to return information to you?

If you’re a traditional insurance carrier, you should be very interested in any analytics associated with back-office operations, including those I just named. You’re competing with online-based providers, such as Geico and Progressive, not to mention even newer insurance startups like Lemonade. From what I’ve seen, those companies measure everything - not just processes and output that directly touches a policyholder. To remain competitive with these companies that are largely or entirely digital, you need to be measuring just as much, if not more.

Data and analytics are important. Make sure you’re looking at them and applying them across the entire business, including back-office operations.