If you don't think that people will be willing to be tracked for their insurance, take a look at the settings on your mobile phone.
There you will see all the apps tracking your every move.
"I downloaded an NCAA app because I wanted to watch the games while I traveled, and it is tracking my movements," Chris Stehno of Deloitte Consulting said at the LIMRA Life insurance Conference on Tuesday in Las Vegas. "The NCAA doesn't need to know where I am, but it is so easy to sell people's data."
Stehno was talking about all the data opportunities that are already available but that life insurance companies are not taking advantage of.
In fact, he said he could easily find out how much a risk you have for a disease within minutes. So much data is available on anyone that he has to ask why life companies still have to take 30 to 60 days to underwrite a policy.
Property and casualty companies have been perfecting the use of data for some time, Stehno said. Progressive led the way, eventually using 100 data sources.
P/C companies learned how to use uncorrelated data for more accurate predictions. For example, traffic tickets are not necessarily the best predictor of whether someone is likely to die in a car accident.
Rather, looking at where clients live gives a clearer picture. If someone resides near a busy intersection with frequent fatalities, that is a more significant indicator of their likelihood of dying in a car accident.
Progressive became so voracious for data that it ran out of sources, so it went directly to customers, asking them to agree to allow tracking. Consumers allow tracking on their phones for far less, Stehno said.
So, by using tracking, life companies would not only be able to shorten the underwriting process to minutes, but insurers would also be able to assess the risk that they assumed.
"With the tracker," Stehno said, "they would be able to see if you went to the gym at 5:30 p.m. like you said you do or go to the bar."
Life companies can use predictive analytics not just for prospects and clients, but also to predict how well a job candidate would do as an agent.
Increasing that accuracy helps sales and cuts considerable expense.
"It takes $50,000 for every agent a company trains," Stehno said. "And only one in five is successful. So companies are spending $350,000 for every agent. Wouldn't it be better to know which one is more likely to be successful even before training starts?"
It's one of the many questions that Stehno says life insurance companies should be asking if they want to remain viable in an increasingly competitive world.
Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. He was also vice president of communications for an insurance agents’ association. Steve can be reached at firstname.lastname@example.org.
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