How to strategically monitor your book of business

Achieve goals faster

Active risk management starts with deciding on a strategy. Determining the right strategy then determines the right data agents need to have the right conversation with policyholders as they experience changes.

• If your goal is to increase lifetime value and deepen customer relationships, look for events such as: Who's getting married? Who's having children or has bought a new car? Who has started a new business?

• If your goal is to improve retention, you might look for: Who is planning to move soon? Who is reviewing current coverage?

• If your objective is to improve profitability, you might monitor: Who has renovated their home? Who has new individuals in their home? Who has received a moving violation?

Active risk management programs use data and technology to carefully watch for these events across the entire book of business. For example, LexisNexis Active Insights automatically monitors and alerts insurers of events that indicate a critical change in a policyholder's life, which may drastically affect their insurance needs. When the technology flags a key event, insurers, agents or brokers can engage policyholders at the perfect time.

Typically, active risk management programs leverage data from thousands of sources, spanning databases, public records, proprietary information and assets to understand key events in the lives of policyholders. They employ advanced linking technologies to pull together the right pieces of information from the disparate data sources, then apply advanced analytics to deliver the insights.

These technologies catalog events as they occur, and relay the insights to the carrier. What was previously a manual data "pull" can become an automatic data "push."

The insights are quickly matched to policies in a monitored book of business. Each company can set its own parameters of which data elements to monitor, and how often to receive reports. One company may prefer immediate alerts, while another may opt for regular summary reports.

Addressing privacy concerns

Does this kind of monitoring compromise customers' privacy? In the age of social media, more people have become comfortable sharing more information with the companies, stores and websites with which they do business because they expect that shared information will be used to better serve them.

In a 2014 survey, Gartner research found that 22 percent of consumers would consider sharing health information such as exercise data, and 26 percent could imagine sharing more information on their family and lifestyle needs, so insurers could offer them better polcies.

Ultimately, the carrier, agent and broker know the customer. An active risk management program provides the insight these insurance professionals need to reach out, but it's up to them to consider how and when to act on the information based on their knowledge of the individual customer's preference and sensitivities.

With insight into their policyholders' changing risks, insurance professionals can ensure that the coverage and services offered address their customers' specific needs at the point of change. Engaging at the right time with much needed advice helps agents exceed customer expectations and builds loyalty. Those who engage first with customers hold the competitive advantage.

Victor Bayus is vice president, product management insurance for LexisNexis Risk Solutions, based in Alpharetta, Georgia. He joined the organization in 2010 and is responsible for managing existing products and developing new data solutions for the insurance industry.