Applying Data Analytics to Health, Auto, Home and Life Insurance

Data mining and big data analytics offer a way for insurance companies to gain insight into their customer base, to cut risk and to increase their profit margins. A growing customer base and an increasing bottom line are just two of the benefits of bringing data analytics into the world of an insurance company.

Plenty of insurance data exists out in the world, offering a wealth of information about different classifications of people, their behavior patterns, and lifestyles. Factor in demographics like age, sex, location, and gender, and you have even richer information on an individual’s likely actions.

Risk is a major consideration for any insurance company. Finding ways to identify high-risk clients before signing them up offers the chance to deny insurance or give them a higher rate commiserate with their risk potential.

The Benefits of Insurance Data Analytics

Information about customers and their behaviors, lifestyle, and demographics is out there, and insurance data analytics can extract valuable information with proper mining. Some of the benefits of data mining for insurance providers include the following:

• Making accurate risk assessments
• Predicting the types of insurance that customers are likely to want in the future
• Detecting fraudulent claims

When it comes to the four major types of insurance, specific benefits are available for each:

Data analytics for Health Insurance

The health insurance industry is experiencing drastic changes and there are more on the horizon. Data analytics will help these companies survive by:

• Identifying high-risk health insurance customers based on demographics, behavior patterns, and lifestyle
• Predicting whether a customer will want to add extra health insurance, dental insurance, or a maternity rider
• Detect fraudulent claims for high-cost medical procedures, medicines, or long-term medical problems

Data analytics for auto insurance

High-cost repairs and personal injury costs are rising. Auto insurance companies can cut costs while increasing their customer base with the help of data analytics doing the following:

• Identifying drivers who pose a risk for multiple high-cost claims, poor driving skills, or addiction problems
• Identify cars which pose a higher risk for high-cost repairs
• Predict whether an insured driver may want to expand their insurance coverage for multiple vehicles or to add more insurance
• Identify fraudulent automobile accident claims for property damage or personal injury

Data analytics or Home Insurance

Construction and home repair costs are going up like everything else. To cut claim costs, home insurance companies need the data to:

• Identify houses in high-risk areas for crime, natural disasters, and liability claims
• Identify homeowners who pose a higher risk of making fraudulent claims or whose lifestyle would create a higher risk of liability claims
• Predict whether a homeowner would want to add more coverage for high-priced belongings or expand liability coverage
• Identify fraudulent liability claims for injury or damage

Data analytics for life insurance

The population is growing older. Lifestyle and diet are increasingly relevant to a client’s policy. As the risk for life insurance companies increases, big data can help:

• Identify individuals whose behavior and lifestyle show a higher risk
• Predict the customers willing to add more life insurance coverage for themselves or family members

We’re just getting started

These specific benefits are only the beginning of what an insurance provider can reap by using insurance data analytics. In fact, data mining and analytics are still evolving. As the science and business of analytics mature and data mining results become more readily available, the impacts will continue to grow.

Insurance providers, insurance agents, and anyone in the business of providing quotes needs to understand the potential benefits of this technology. The reality is that those who do not embrace the potential will see other companies move ahead, reducing risk, growing their customer base, and increasing profits. Do not be the one who stands in the shadows. Be one that embraces insurance data analytics and its rich potential. You’re not alone in this field. We can help!

Learn more about insurance data mining

Gain an edge in the the growing field of data analytics with free Ebooks, whitepapers and other premium resources in the IKANOW Resource Center, or see how our open analytics platform can boost your business with a free one-on-one demonstration.