Reduce Your Costs by Modernizing Your Distribution
In the first in my series on the benefits of modernizing your distribution network, I’m talking about how modernizing leads to a reduction in costs. Reducing operating costs increases profit margins, especially on lower value policies.
According to consulting firm McKinsey, those individual insurance companies who will outperform their competitors over the next decade will do so, in part, by “using analytics to build competitive advantages in distribution.” Superior distribution networks will allow them to reach new customers and keep costs low to make that customer profitable.
For an example of how modernizing distribution with a SaaS provider cuts costs, let’s look to software and service solution provider Enservio.
Enservio works with property insurance carriers, offering them a variety of tools to refine their premiums and price policies correctly. Using Enservio’s tools, insurance companies can more accurately estimate the value of a home’s contents.
This helps them reduce the necessary time to negotiate losses by up to 70%.
Their platform streamlines claims payments, which also reduces fraud. Enservio provides a SaaS platform similar to Breathe Life’s. Clients can use it in-house or engage with Enservio to provide services. When building a SaaS platform, providers such as Enservio can integrate algorithms to analyze the data provided when customers apply for policies and submit claims.
Superior data and embedded analytics give insurance companies insight into their customer’s behaviour, which in turn guides more accurate premium pricing. Analyzing data patterns to see outliers and unusual activity also identifies fraud faster, saving the company money. This data can also identify poorly-performing or slipping distribution channels so that companies can move swiftly to make cuts or take actions to return them to performing well.
Having your own proprietary platform means that you are collecting and analyzing your own data, but working with a provider means you get significantly more information that can help in your decision-making processes. Providers work with multiple clients and collect anonymized data from throughout the industry. When aggregated and analyzed, companies have a wealth of information that can help them guide their business growth. This is something that we are seeing in businesses across every industry. Take Stripe for example, Stripe processes payments from 195 countries and from every industry, company size, and business model. Because they are so widely used the data they collect is used to analyze and prevent fraud and chargebacks saving businesses time and money.
Breathe Life is bringing a similar model to the individual insurance industry where carriers will have the data and information they needed to understand what buyers need, prevent fraud and grow sales.
Outdated and unwieldy distribution networks have been identified as one of the biggest constraints on growth in the individual insurance industry. It’s so important for individual insurance companies to modernize their distribution network which will lead to a reduction of their costs.
Stay tuned next week as I look into how modernizing your distribution network will help you reduce risk.