The insurance industry was one of the first major sectors to adopt data warehousing and CRM when these corporate solutions were first introduced and promoted as effective technologies and methodologies, for managing customer relationships where very large customer bases are involved.
Benefits of the Data Warehouse
Significant benefits have been achieved in managing relationships and in enhancing service to insurance industry clients, as well as to improving the corporate bottom line, for those organizations which adopt effective CRM strategies. These benefits have been achieved in several areas, including:
- Product Pricing
- Impact of Pricing Changes
- Reserves
- Reducing Fraud
- Identification of Providers
- Analysis of Geographic Clustering of Risk
- Analysis of Agent Sales
Pricing Products
The price of insurance products is based on a number of factors. For example, life insurance premiums are based on personal information including: client age, location, current and past health condition, smoking or non-smoking. Similarly, automobile insurance is based on type of vehicle, driving record, location, mileage driven per year and similar information. The insurance company's data warehouse enables agents to establish the most significant factors to be considered for setting the price of an insurance product to cover losses, including underwriting factors, and deciding whom to insure at what cost.