Why insurers need to know about behavioural analytics

Artificial intelligence applied to big data has opened many doors for various industries. One of the applications of AI and big data is behavioural analytics. Insurers would do well to leverage this and make it a priority.

Cloud Insurance recently explored how behavioural analytics has impacted the insurance industry.

Firstly though, what is behavioural analytics in the context of insurance? Cloud Insurance said it involves analysing customer behaviours to understand and predict behaviour. This can be done by collecting data on things such as purchase history, browsing history and location data.

Insurance companies have been using it in various areas, including product management, marketing, and digital advertising. The insights gained from behavioural analytics can help insurers improve customer experience and generate business growth to understand and predict customer behaviour.

Cloud Insurance said that customer surveys and focus groups still remain a valuable way of gathering deeper insights from a select group of people, but this method’s main downfall is that it relies on opinion and memory. Behavioural analytics is much more accurate as it gathers data from actual behaviour recorded.

Moreover, it also is able to gather data from hundreds of thousands of people and areas, in a fraction of the time that surveys would.

Since it helps understand customer behaviours, these insights can be used to more accurately determine the risk a customer is likely to pose to an insurer. It can also improve customer experience, leading to increased profits.

So, what areas of insurance is behavioural analytics disrupting?

According to Cloud Insurance, behaviour analytics can provide value in healthcare insurance, pet insurance, dental insurance, and travel insurance.

For example, within the travel insurance industry, which is seeing a surge in demand following the pandemic and the subsequent recovery, behavioural analytics can predict the probability of travel.

One application, Cloud Insurance said, is matching purchasing trends with life milestones. For example, someone who has just graduated from high school or college may be more likely to travel for their gap year. Or someone who is planning for a wedding will also be preparing for their honeymoon.

In this use case, behavioural analytics is not used for risk assessment, in the way it is for health or dental insurance. In addition, Cloud Insurance explained that behavioural analytics in travel insurance will often go hand-in-hand with health insurance. For example, health coverage for travel to certain countries could include coverage for diseases that have been identified as a higher risk for that region. Insurers could also include additional benefits or lower premiums for those vaccinated against these identified risks, where applicable, before travelling.

Whatever the line of insurance, behavioural analytics can be leveraged to provide a competitive edge. Cloud Insurance said with the data involved with behavioural analytics, insurers can shift from a reactive to a proactive approach to offer more competitive packages, create more diverse coverage, increase their market share, avoid unnecessary costs, and reduce liability.

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