Data mining may uncover hidden sales opportunities

By Kate McCaffery | September 22 2014 11:52AM

To the uninitiated, data mining an advisor’s book to turn up prospective sales leads, sounds like a marvellous, almost ‘no-brainer’ way to generate new business. In reality however, data mining insurance information can be a messy business, and campaigns are generally haphazard, if they are undertaken at all by managing general agencies (MGAs) and carriers.Despite the work required to pull it off too, the effort is frequently ignored by advisors on the receiving end. In short, the resulting list of leads that a lot of companies create for their producers, is not the gift they appear to be at all. Instead, with very little information attached, and even less supporting material, that “gift” is far more likely to be ignored because of the huge amount of work that is required to follow up effectively.

“You look at the list and realize you have 200 policies to research now – you need to see what they are, compare them to the market, and create presentations. It leads to a lot of work, and that’s what throws advisors off,” says Jim Ruta, managing partner with the firm creating InforcePRO Software. “If you just create lists, what you end up doing is creating inordinate amounts of work for the advisor, and they do nothing with it.”

Worse, he says, such a list can make an advisor feel like they will never get out from under the responsibility it creates.

Happily, technology has finally started to catch up to the industry. Interestingly too, it would appear technology could be what bridges the gap between high performers, the industry’s super-stars, who effectively manage their existing books of business as a matter of course, and the industry’s mere mortals who struggle to realize this fuller potential.

“The rock stars don’t even need data mining,” agrees David Stewart, executive vice president with the Financial Horizons Group. “They’ve got it in their heads. They’re dialed into their client base. There’s very little you can do for them, even with this InforcePRO. It’s the advisor who either has no staff, or who has problems managing staff, and a decent size client base who will benefit the most.

Practice management

The program is one of the newer incarnations of practice management software available, designed for insurance advisors specifically.

Ruta is a well-known face, speaker and author in the industry. In championing this latest project, he describes InforcePRO as a platform that will sift through an advisor’s book of business, find leads, and use that information to generate presentations, and communication packages – it will even help a company to understand or quantify the untapped commission potential and opportunity that exists in the advisor’s book, he says.

For Stewart’s firm, the resulting information is proprietary, but he agrees the untapped potential is significant. Ruta’s analysis across his wider group of program users suggests advisors can routinely have anywhere between $150,000 and $300,000 worth of potential, untapped compensation on their books.

While there are a large number of platforms for managing contacts, or managing productivity, Stewart says there isn’t much out there for an MGA interested in managing insurance contracts specifically with the same level of sophistication.

HUB Financial is another company making use of recent technology developments to provide better leads to its advisors. In this case, the company uses Blue Sun as its back-office provider, and Sales Drive, branded HUBForce, to identify opportunities, prioritize them, and present them to its users.

To date, HUB has primarily focused on renewal campaigns, but Diana McKay, senior vice president of business services at HUB Financial Inc., says the company is making a concerted effort to build additional campaigns with its vendor.

“Being able to get out in front of your clients, every time you have an opportunity, is always a good thing. Age, a change of address, there’s always a sales opportunity,” she says. “This is for the advisor who can’t do it themselves, or who doesn’t have the tools. We don’t want to miss the opportunities for the MGA as well. Down the road, there could be opportunities where advisors don’t want to act on certain opportunities; we would work with somebody else to do so.”

Orphaned clients

The company is not interested in tracking an advisor’s activity – those who deal with the MGA are independent agents – McKay’s reference is more pertinent to the problem MGAs have with so-called “orphaned clients,” those without an active agent of record.

“It’s no different than a client calling in to say ‘I haven’t heard from my advisor in four years, and I know my policy is coming up for renewal. I don’t know what to do.’ We would make sure we find an advisor who can work with them. This might increase the volume of that activity, because it’s easier to find, in the data, potentially ten of those clients, where only one might phone us otherwise.”

Orphaned client policies come up as a concern, in discussion with Stewart, as well. “That’s pretty important for us as a business,” he says. “We have a lot of clients that are being underserviced.”

Although HUB’s system is automated – an improvement over manual processes and one-off campaigns – HUBForce does still rely on data exchange from carriers. This element has long been one of the most significant barriers to getting a seamless transfer of information, and better platforms in place.

Indeed, the uninitiated might reasonably wonder why account management is such a new thing for the insurance industry, when other industries and their supply chains have been online and automated for years.

Stewart points out that insurance contracts – contracts being the key and operative word – for legal and regulatory purposes, can’t simply be renumbered the way an account might be changed at another company when technology systems change with the times.

Today, information coming from carriers is generally not complete either. While there are ongoing, separate initiatives to get carriers to migrate to a standard format for exporting information for use in other systems, progress is slow, surprisingly complex, and not all carriers have adapted.

“In the investment world, we get monthly files to reconcile against our back office system,” McKay says. “Every company provides the exact same type of abstract – their systems go through the same process with each one. In the insurance world, just for in-force data, we get it right now in probably four or five different ways and formats.

Regulatory requirements

Stewart agrees, pointing out, also, that regulatory requirements about how carriers and distributors handle contracts, is part of what holds carriers to the use of legacy systems that are decades out of date in some cases. “You can’t change anything in the contract. It’s so onerous to do that it’s cheaper to use the vacuum tubes from the 50’s until those policies are gone, than to put them on a new mainframe.”

To get around this particular problem, Inforce actually had rate card information, dating all the way back to 1972, added to its systems for reference when advisors are faced with the task of researching the viability of an old policy.

“You needed to get an agent or record letter, and submit it to the company,” says Ruta. “You submit it to the company, they think about it for an appropriate amount of time, and then hand out the results, sometime in the future, whenever that might be. Instead, you can get information about that policy in three minutes now, with one screen, from your iPhone.”

It remains to be seen if insurance distributors will catch up entirely to other parts of the industry. In securities, for example, PriceMetrix Inc. analyses client base details at such a level, it can almost tell an advisor how much a phone call of their time is worth to their bottom line.

Using their aggregate data too, the firm has identified, at a very high level, early indicator characteristics which can be used to indentify future high performers. It has also identified which clients are most likely to stick with an advisor, or move on to the next. Given the significant business differences, their results are not directly comparable (PriceMetrix says it still does not work with insurance providers), but their findings do provide food for thought when considering where insurance providers and distributors might go in the future with their relatively new abilities.

More immediately, the new developments today are being met with a fair bit of enthusiasm, for obvious reasons (income potential), and for a few, less likely, knock-on advantages, as well.

Increased professionalism

Succession planning, McKay says, is one area where the evolved technology offering will help. “It’s a difficult thing to value an advisor’s block of business,” she says. “You can value it now, based on service fees, and how far out you want to pay service fees, but we’ve never really been in the position where we can look at a block of business from a potential perspective. I think that’s significant.”

Ruta also suggests technology will enable the shift to a more professional industry that is so often elusive with the current mindset that a lot of agents maintain today.

“Advisors are all looking for new business. That’s why they need this data mining idea, but they need it at the higher level,” he says. “Regulators are pushing this too. They’re saying you can’t leave your orphaned business alone anymore,” which is causing MGA executives he’s spoken with, a fair bit of stress. “They can’t keep track of their orphans, and they can’t service them properly. But now, they can.”

“Client service is one the great values. The perception of value goes up significantly. You’re not seen as a sales person just moving from one town to the next, getting the next deal, and moving forward,” he adds. “The great agents are the ones who take care of the simple stuff. You improve the reputation and the image of the life insurance business. We’ve got to be more professional.”

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