Many insurance advisors spend their time wooing prospective clients. Yet, these advisors may be sitting on a gold mine of sales opportunities within their existing book of business. By utilizing data-analysis technology, experts say, advisors can tap into these opportunities efficiently and generate more sales.
“There is value in data mining,” says Jim Ruta, an insurance industry consultant and president of Burlington, Ont.-based Expertinstitute.com. “A tool like this provides advisors with access to better leads from their own block of business.”
Data analysis can be used to analyze all of your clients’ existing insurance policies. This software works behind the scenes, around the clock, to scan your in-force business in order to detect such things as which policies will soon be up for renewal, which policies may be affected by pending product changes, how the prices of clients’ existing policies compare with current market rates and what types of products a client may be interested in purchasing next.
This analysis helps you keep tabs on your clients and reminds you when it’s time to talk to clients about renewing their life insurance policy or purchasing a new one.
“Advisors essentially are able to mine their database of in-force policies,” says Cameron Jacox, managing partner and co-founder of Peterborough, Ont.-based Jacox-Kanodia Corp., which offers the LifeAssist data-analysis software. “It can produce sales opportunities for [advisors] from their existing clients. [Data mining lets advisors] benefit from all the work they’ve done over the years.”
Some financial services institutions have been using data-analysis technology for years, says Louis Régimbal, a partner in the advisory management consulting group with KPMG LLP in Montreal: “It’s something that the banks have been using for a very long time to help them predict general patterns of behaviour of their clients across a wide range of product sets.”
You can use data to gain insights into your clients in similar ways. Some larger firms provide their advisors with data-analysis capabilities or help with the cost, as the technology can be expensive to implement, Régimbal says: “[This technology] is fairly complex to put in place, and it requires some investment. For the people who are part of the larger networks, it’s going to be easier for them to access these capabilities.”
For independent advisors or smaller firms that don’t have in-house data-analysis technology, an alternative is to use a third-party provider, such as LifeAssist. A subscription to LifeAssist costs approximately $100 a month. In addition to delivering detailed analysis on a regular basis, the software also provides subscribers with individually branded marketing materials to help with the sales process.
On average, LifeAssist generates about two new policy applications a month, Jacox says: “The system is constantly running market quotes, presenting opportunities for the client to save money, and giving the broker opportunities [for commissions].”
@page_break@An advantage of generating sales from your existing book of business, he adds, is that they’re often more lucrative than sales to new clients. Statistics show that premiums for transactions involving the renewal of an insurance policy, or the sale of a new product to an existing client, are 15% higher on average than the initial transaction.
Data-analysis tools are particularly useful if you have a large book of business. Anyone with 300 or more in-force policies probably has a hard time keeping track of which clients’ policies are up for renewal, Jacox says: “For somebody who has more than 300 or 400 in-force policies, it’s difficult to know everybody by name and keep track of everything. It gets to a point where it’s unmanageable.”
Data-analysis software can be especially helpful if you are acquiring a book of business or beginning to think about succession planning. In order for a successor to be able to take over your book of business effectively, Jacox says, he or she will need some way of efficiently navigating your roster of in-force policies.
“It’s really important to have a well-documented and compliant book of business,” he says, “and some systems in place for the new people coming in to continue to serve clients at the level you’d expect.”
Data-mining tools also can help you ensure you’re meeting your compliance responsibilities. If you have hundreds of clients, Ruta points out, you may have a hard time conducting an annual review for every client. But a data-analysis tool could help you flag the files in the greatest need of review to ensure that your clients’ policies remain suitable and continue to reflect their current needs.
“From a compliance perspective, you could be held accountable for the fact that you didn’t review their stuff every year,” Ruta says. “This is an automatic way to give you a leg up.”
Clients also can benefit from the use of data analysis, as it theoretically can improve the quality of advice they’re receiving, Régimbal says: “Ultimately, what it means for customers is that they should be getting more relevant help, assistance, products, advice and interactions with their advisor.”
Indeed, Ruta encourages advisors to highlight this kind of tool as a key part of their value proposition. It provides value to your clients, he says, by assuring them that you have a method in place to monitor their policies constantly and to identify money-saving opportunities for them.
Although data-analysis technology can help considerably in the process of identifying potential sales opportunities, Ruta notes, the hard work associated with executing the sales is still up to you.
“I don’t think any data-mining system can replace the good advice of an experienced advisor,” Ruta says. “But I do think it’s a tool that quality advisors can use to improve the quality of their work.”
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