How analytics helps brokers
It’s time to talk about analytics, with the numbers, and the graph visuals, and the predictive modeling, and the shameless Professor Frink ripoff (not sooooo subtle). Hey, we get it. This is Math’s dorky kid brother who actually thinks he’s got game (“I can bore you in real time!”). Well, wake up, because David Davidson can actually make analytics interesting. Even more amazing, he knows how they can be useful to brokers.
At a recent conference in Toronto, the senior consultant for the Boire Filler Group showed how one business’ average premiums had increased by 25 percent—but this didn’t tell the whole story. The increase, he told Top Broker, “wasn’t necessarily because of organic growth within the book of business. It was because underwriters raised rates and that in turn increases commission revenue, because commission rates don’t change.”
Brokers benefit over time, Davidson points out, from increasing values, and that can hide key metrics. “You’re seeing growth, but there’s also a decline in the business—there’s the decline in the core business in terms of the number of customers.”
And analytics can help brokers focus on the right high value customers for retention.
Davidson concedes that good ol’ face time with clients still plays a critical role, but “there’s lots and lots of opportunity for [brokers] to become more sophisticated marketers and understanding their business better through analytics.”
He’s run into his fair share of resistance. “I think by virtue of the nature of the relationship between underwriters and brokers, the reaction to these kinds of reports or tools or approaches has been, ‘I think it’s great, this could be very valuable to us—now who’s going to pay for it?’”
But he says a small guy in, say, Bracebridge, Ont., isn’t necessarily at a cost disadvantage for using analytics compared to the bigger operator in Markham. If anything, the smaller broker may have an easier time of it because she’s dealing with less data.
“You don’t have to get really sophisticated,” says Davidson. “You just have to start.”
Copyright 2015 Rogers Publishing Ltd. This article first appeared in the August 2015 edition of Canadian Insurance Top Broker magazine