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Data & Analytics

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Digging for Dollars

Insurers are mining data and implementing sales force automation tools to manage distribution channels more effectively.

The insurance agent often is portrayed as an Arthur Miller-esque character, going door to door with an oversized briefcase brimming with paper applications. While that might have been the way carriers pursued sales in the 1950s, today, selling insurance means connecting with the customer, and it takes more than just a smile and a shoeshine. It takes knowledge.

To maximize profits from distribution channels, insurers must understand the needs of their producers -- the agents (both independent and captive), brokers, agencies and banks (and other third parties) with which a carrier has partnered -- in order to provide them with tools to grow business. Historically, however, a lack of knowledge about distributors' needs has prevented the industry from optimizing channel management, according to experts.

"The specific challenge is to appeal to the various client needs -- wholesalers, brokers, captive agents and independent agents," says Clifford Jack, EVP and chief distribution officer for Lansing, Mich.-based Jackson National Life ($67.8 billion in total assets). "Oftentimes, even within the same channels, their needs are very different. Across the channels the needs are magnified. But as a manufacturer, it is important to meet those different requirements."

To understand and meet the complex needs of each channel, insurers increasingly are seeking to maximize their vast stores of data to gain insight into how each channel sells and to implement sales force automation (SFA) tools. Further, insurers are sharing this information with their distribution partners to help them refine their efforts and target which products prospective customers might want.

"The overwhelming trend that we are seeing is insurers trying to get more yield and quality data out of their distribution systems to try to understand who their most-profitable producers are," says Kevin Sharps, a director of consulting at Deloitte (New York). "[Carriers] are also increasingly using data management to make their dashboards much more robust and gain a better understanding of the distribution systems. This allows them to develop more-tailored strategies around each of the distribution and producer groups they are targeting."

Data mining and SFA also help insurers manage leads and distribute them to the appropriate channels as well as identify opportunities to cross-sell, says Kimberly Harris-Ferrante, research vice president of insurance at Gartner (Stamford, Conn.). "A lot of carriers are getting leads from Internet channels," she explains. "Focusing on managing the leads has become a priority to many carriers."

Insurance companies are using an array of SFA technologies to manage channel data and support their distributors. For example, customer relationship management (CRM) products from vendors such as Oracle (Redwood Shores, Calif.) and (San Francisco) help carriers and producers build customer relationships and develop leads. Distribution and compensation management systems from vendors such as SAP (Walldorf, Germany), Trilogy (Austin, Texas) and Callidus (San Jose, Calif.) offer insurers the ability to analyze channel and producer performance. And predictive underwriting models from vendors such as Valen Technologies (Denver) and InsureWorx (Denver) allow insurers to more accurately price products. Further, such applications are being used with technology -- including Web portals and Ontario-based Research In Motion's (RIM) BlackBerry devices -- that places the data in the hands of the sales force, often in real time.

The degree to which insurers are implementing SFA technology -- and the specific solutions they are adopting -- to support channel maximization, however, often depends on the products they are selling, according to Ferrante. "With P&C companies, distribution is a second-tier priority. They are focused on mostly front-office projects such as self-service and Internet strategy," she asserts. "However, for life insurers, distribution is a top-tier priority, and the focus is on the back office and focusing on technology to support illustration, new business and underwriting."

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