There is data swirling around in your future, rocketing in your direction at light speed. It will fill every nook and cranny of your agency and, no doubt, will sometimes overwhelm you. 

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These days the collection and analysis of data may be the industry’s most important sales tool.

To glean even more insight, agents will have to determine what other data they need to better serve their customers.

One Florida firm developed a 64-question workers comp client survey to better understand client risks.

Success will no longer be measured in primo salespeople and insurance virtuosos. You will remain profitable by retaining and rounding out client accounts through data collection and analysis—perhaps the preeminent new sales tool of the 21st century.

While firms are often reluctant to invest in client data, it is now a necessity. Technology, along with other factors, is changing how insurance is sold. Merely focusing on a premium-driven model is shortsighted, says Chris Gagnon, director of strategic technology for The Council and president of Tiebeam Partners.

“Up until this point,” Gagnon says, “you could create and grow a successful agency focusing on being a product distribution arm, but this is no longer enough.”

Brian Cohen, president and CEO of Los Angeles-based Strategic Growth Advisors, says selling insurance is becoming less about what is being insured and more about who is being insured.

“You really have to capture the account,” Cohen says.

Clients have grown more sophisticated about policies and know how to shop around. In other words, Cohen says, they are less reliant on brokers. “Those that can’t add value,” he says, “are going to lose business.”

Brave New World

Insurers are quickly becoming a competitive threat to agents as well, Gagnon says. Insurers are already starting to sell small commercial insurance online, just the way personal lines is being sold. Insurers not only stand to save commission dollars and obtain more customer data, but will also be poised to compete with agents on the service level, which is a core component of every agent’s value proposition, he says.

Another threat, says Cohen, comes from agents and brokers who are already using predictive analytics to tempt the best customers away from competitors. Those not collecting and using client data will soon find themselves losing competitive traction, he says.

They don’t see the impact to their business because it is slight, month over month, and when they wake up and realize there is a problem, it is too late.

Brian Cohen, Strategic Growth Advisors

“It is a melting iceberg,” Cohen says. “They don’t see the impact to their business because it is slight, month over month, and when they wake up and realize there is a problem, it is too late.”

For these reasons, Gagnon says, agents and brokers must better know their risks by collecting and assembling client data on a whole new level. “Agents and brokers collect a tremendous amount of insured data to transact business, but after the coverage is bound they rarely think about it again,” he says. “If they can shift their mindset to using it for gaining insight into the customer, the value would be enormous.”

“We need to start to participate in the data-driven model, as insurers are already doing,” Gagnon says. “We are much closer to the insured than the carriers. If we can get our data house in order, then we can create insight that insurance companies cannot.”

Becoming Data Driven

Collecting extensive client data, says Cohen, is “still very much in its infancy because most agencies view themselves as salespeople.”

To get started, agents must “get off of paper processing” to obtain a single view of a customer from a data perspective, Gagnon says. Even using the data that agencies already have can be helpful. “If you have a 20-year incumbent account, what are you doing with 20 years of deep data and information about the insured? How are you using it to create meaningful insight to your client?”

Cohen suggests that brokers should take stock of the data already being collected. They should make a spreadsheet with all available data pieces, such as information from annual reviews, he says, and include information that underwriters request, such as the age of a company’s roof.

Then, Gagnon says, place all the data in a data warehouse. That can present a challenge, as many agents have single-customer data spread across many systems and spreadsheets. Gathering data in one place is also challenging because even the newest systems lack all the functional features agencies need, Gagnon says. Data also need to be kept safe.

To glean even more insight, agents will have to determine what other data they need to better serve their customers. Once they do, they should ask customers non-invasive questions that provide a window into the risks they are insuring. They might ask how many employees telecommute, for example, because employers cannot control the environment of employees who work from home.

One agency asking the right questions to aid customers is the Insurance Office of America, based in Longwood, Fla. The firm developed a 64-question workers comp client survey to better understand client risks and help its clients obtain appropriate coverage at the best price.

“We are trying to become consultants and be less about selling a policy,” says Jeff Lagos, the agency’s president. “We want to be problem solvers.”

The survey, designed for mid-market accounts with 75 or more employees, helps clients garner underwriting, appropriate coverage and pricing considerations, Lagos says. “We have had numerous cases where we have gotten rate decreases or even turned around non-renewals,” he says.

Since acting on the survey has helped clients reduce claims, the survey has also helped clients decide when to accept more risk retention.

“It helps us gain new clients by giving us a system to show them how to manage their operation in a way that reduces their workers compensation claims, which in turn reduces their premiums over the long haul,” Lagos says.

To develop the survey, which creates conclusions similar to risk scores, the firm asked underwriters to identify what information is important for underwriting risk. Most questions require a yes or no response.

If we can get our data house in order, then we can create insight that insurance companies cannot.

Chris Gagnon, The Council

Here is a sampling:

  • Does your company list physical demands of job descriptions?
  •  Does your company use integrity testing of prospective employees?
  • Are all incidents reported within 24 hours of knowledge of the incident?
  • Does your company provide the claims adjuster all documentation within three weeks of notice?
  • Are all company supervisors trained on what to do before and after an injury occurs?

Since several departments are surveyed, results can reveal discrepancies between perceived and real cost-containment activity.

“We ask different layers and get wildly different answers,” Lagos says. The clients so appreciate the survey outcomes, they don’t mind taking them annually, he says.

Cliff Barbieri, president of Advanced Tower Services, a 45-person communications-tower construction contractor in Albuquerque, says the questionnaire helped him improve hiring practices. The company now requires prospective employees to take an integrity test. The questionnaire, Barbieri says, “pointed out gaps in management teams and communications” and encouraged his team to update the company’s safety program sooner than planned.

Insurance Office of America is going to expand its survey for other lines of business, starting with commercial. “We are trying to work with homogenous exposures,” Lagos says.

Outside Pitch

Brokers can also incorporate outside data, just as other industries do to round out their view of their individual customers. “It’s time for agencies to join this trend,” Gagnon says. “Data is being collected on everyone and everything at an astounding rate. It’s readily available for those who realize the value of a complete picture.”

Agents can also find outside data for their business partners. “This is where your carrier, your aggregator, your lead generator, your agency management system can all provide you with information to tell you what additional information you need to collect to better identify risk,” Cohen says.

Adding analytics will help agents glean even more insight into their customers. Applying analytics can be confused with benchmarking, which merely compares performance to a standard, Cohen says. The algorithms used in analytics can identify relationships that help predict behavior or performance. These correlations, or predictors, provide a more accurate measure of a client’s riskiness.

Predictive modeling, for example, is challenging some traditional assumptions about characterizing risk, Cohen says. “We are using computers to find correlations that we couldn’t see before,” he says.

We want to be problem solvers.

Jeff Lagos, Insurance Office of America

The Atlanta-based brokerage Beecher Carlson has successfully applied predictive modeling through its ZOOM platform, a process that helps the company identify opportunities for risk improvement. The platform provides clients on average a $5 return for every $1 they spend to participate in ZOOM.

“When a client engages Beecher Carlson’s ZOOM process, the actuaries gain even more insight to provide clients a forward-looking balance between risk retention and buying coverage,” says Sharon Brainard, senior managing director of the national casualty practice.

In most workers comp programs, 15% to 25% of the claims will account for at least 90% of the costs. ZOOM has expanded its algorithms to predict those high-risk claims before they become problematic, Brainard says. Beecher Carlson is also adding commercial insurance to the ZOOM process.

Getting into a customer data collection and analysis mindset can be challenging for brokers, but they find their reward—happy customers who keep coming back—is worth the investment.