The following article was written in collaboration with Victor Insurance.

Historically, insurance companies have accumulated vast amounts of data, but have been slow to leverage this resource by developing new business models or services that leverage data and analytics. As more insurance consumers turn to the internet to compare products, prices, and make purchases, the amount of data available has increased dramatically.

Most importantly, advanced analytics technologies now give customers the ability to leverage this data in ways they never imagined before. Yet many customers struggle with internal barriers to becoming truly data-driven organizations, while others delay upgrading their analytics capabilities, waiting for clear business opportunities to emerge.

Speaking with Insurance Business, Michael Ferber, president of small business at Vector Insurance, and Leslie Downs, director of strategic partnerships at Vector, emphasized the importance of data in today’s insurance environment. Ferber, who moved to Vector after the ICAT acquisition, noted that while agents are often overwhelmed with day-to-day tasks, they may lack the time or resources to fully analyze the data available to them. This oversight can lead to misaligned strategies, as agents may focus on demographics that don’t align with their actual customer base or spend too much time on low-return segments.

“Agents may spend a lot of time marketing to a specific demographic or customer segment, but when they start looking, only 30% of those customers may make it to the renewal cycle,” Downs noted. “This lack of focus can lead to wasted effort and missed opportunities for growth.”

The Role of Predictive Analytics and Strategic Focus

Downs highlighted the importance of understanding and effectively leveraging data in today’s insurance environment. Downs shared a recent conversation with an agent that highlighted a common issue: “Knowledge provides the answers, but agents are often so busy with everything that comes through the door or answering calls that they don’t always take the time to analyze their data thoroughly.”

This includes everything from what the expected target demographic is compared to what the actual target demographic might be — and often these demographics don’t match up. Agents spend a lot of time dealing with customer requests without fully understanding what they do well.

“When I talk to agents, they often say they get basic statistics from their carrier partners, like how many offers are submitted versus what they’re assigned, but that data is typically aggregated across their entire book of business,” Downs said. “I don’t think they easily collect or analyze that information, so they may not always know where they’re succeeding and what they’re excelling at.”

While predictive analytics holds promise for identifying potential growth areas, both Ferber and Downs agreed that many agents may not know how to effectively leverage these tools. “Predictive analytics can be useful, but the average agent may not know how to use it,” Downs admitted. “That’s the crux of the problem.”

Ferber suggested that agencies need to understand the areas where they typically succeed and the areas where they fail, to avoid investing time in unproductive leads. By focusing on the areas where they excel, agents can be more consultative and collaborative in their approach to sales, ultimately leading to better outcomes for both the agency and the client.

“Another interesting aspect for an agent, in terms of their data, is understanding what typically works and what doesn’t work at the outset,” he said. “When a potential policyholder walks into your office, you may find yourself in a conversation where you know they’re unlikely to succeed because of the type of risk they pose.”

Rather than spending too much time on a scenario where success is unlikely, Ferber believes it may be more effective to direct the conversation toward additional products where there is a better chance of success. This approach allows for a more consultative, rather than transactional, sale, which fosters a collaborative and productive dialogue.

One area where data can definitely help an agent is in ensuring that the policyholder is purchasing enough insurance to have adequate coverage.

“If you insure a property, is the value properly determined? If you cover tools and equipment, is the value accurately reflected? And with a cyber insurance policy, do you really understand the level of exposure you are facing?” Verber stressed.

“The data available can help agents ensure that the policyholder has adequate coverage, which is critical. If an agent provides guidance that results in underinsurance and a loss occurs, the policyholder is likely to file a claim against the agent for that advice and guidance.”

Victor’s approach to empowering agents

Vector’s strategy involves providing agents with the tools and insights they need to better understand their data. Vector’s small business platform, Vector for Agents, integrates technology with real-time data processing, allowing agents to receive immediate feedback on policy submissions. This helps agents quickly determine pricing or whether a policy will be denied, allowing them to focus on viable opportunities.

Furthermore, Victor stands out from the newer technology solutions by having a deep understanding of insurance. Victor’s team consists of insurance professionals, while many of its competitors do not have this knowledge.

There’s also a wealth of knowledge available from third parties that agents can tap into, such as agency management systems and carrier partners. Downs noted that larger agents may have data strategies in place, but smaller agents may not. “If they don’t understand what they have, how do they make decisions about their marketing dollars? Where do they decide to market? How do they do that if they haven’t taken the time to figure out what’s working well within their agency?”

As the industry advances, the role of data will become more apparent. Both Ferber and Downs stressed the need for agencies to embrace technology and data analytics, warning that those who fail to do so risk being left behind. “AI is real, and as data becomes more accurate and accessible, agencies need to get used to the technology,” Downs said. “Understanding and leveraging these tools will be key to staying competitive.”