Three analytics myths brokers still believe

Analytics is only for big companies. Analytics won't improve a broker's system. Analytics is pointless because it just means collecting more data.

These views are still prevalent among insurance professionals, particularly brokers. In an industry that already operates on customer data, why take the risk of using analytics at a high cost and potentially adding no value? But such reasoning betrays a misunderstanding of what analytics should provide and its key role in how insurance evolves, explains Neer Rama, thryve's Force Solutions Product Manager:

"Many brokers are being pushed aside exactly because of analytics. Insurance houses and underwriters are using analytics to make quicker decisions that can serve customers directly, and their gains are pushing independent brokers to the sidelines. Analytics is the backbone of all the new Insurtech startups changing the rules. Brokers are a lot worse off if they don't use analytics to enhance their operations. But many hold off because they think it's expensive, or not for them."

thryve specialises in digital business systems that enhance technical business requirements such as risk management, insurance and customer relationships. It often encounters the myths that brokers cite not to use analytics, and provided a few answers to consider.

Big Data is complicated, expensive, and only for big businesses

Data costs money to collect and store. There are security considerations: you need data scientists, expensive servers and software. You need years to realise a return on investment. When you add it all up, analytics and Big Data are only for the large companies that can afford it.

This myth is very persistent because it was once true. There was a time - as little as a decade ago - when the ability to run analytics was costly and prohibitive. But then, analytics software became much cheaper thanks to cloud software. Today, you don't need to buy servers or even hire data scientists. Instead, you can rent a cloud analytics platform and use services such as Einstein Discovery to organise your data as a data scientist would. Analytics is now accessible and affordable to every size business, even sole proprietors. As long as you have the data and an idea of what you want to achieve, analytics is ready to deliver. 

You already have a "system"

Brokering is a discipline that combines knowledge, intuition and understanding what people need. Good brokers aren't made overnight: developing such abilities is tough yet very rewarding. One can understand why many experienced brokers are reluctant to use analytics. After all, they've been doing well so far without it, using the information and system in their heads to get results.

But it's incorrect to see analytics as replacing any system. A broker's given approach is already based on many different data sources: reading news and whitepapers, and talking to peers and customers. Analytics is one more such source, but it can highlight unknown areas of thought and consideration. If you already have a system, analytics won't undo that. It will enhance your approach and help test your assumptions more effectively so that your system can produce even better results. 

You already have enough insurance data

Insurance professionals collect plenty of data about their customers and the circumstances that affect them. That data tends to translate into the risks and policy choices every customer has, and do the job pretty well. Though data analytics sounds interesting, isn't it just about collecting more data and adding noise to insurance decisions?

The above argument makes a good point: there already is enough data. Yet this reasoning has the cat by the tail. Analytics isn't necessarily about more data. You should ask: does the data tell me all I should know? Is there anything I'm missing, or perhaps an insight that will save my customer money and save my time? Are there ways to pool offerings, or tweak individual policies to be more attractive and lucrative? Analytics helps you use data in better ways. It's an efficiency argument that's hard to ignore.

"Brokers have a lot of valuable data that they can use for many different purposes," says Riaan Bekker, thryve's Force Solutions Manager. "They can create better offers for customers and preempt their needs. They can also use data to improve processes and create efficiencies. But the one thing I want brokers to know is that they can do more. They can handle larger accounts and manage much more complicated demands without needing to expand their own operations. Analytics makes insurance better."

Analytics was once expensive and draining. But that is increasingly the exception. Modern cloud systems, coupled with the experience of business solution providers such as thryve, can turn analytics on a dime for every size brokerage. All this is demonstrable through easy demos on cloud services such as Tableau.

Don't keep believing the myths. Anyone can start using analytics, a tremendous breakthrough for insurance - and the broker's greatest advantage.