2024 will be the year data finally starts working for you

Here’s a bold prediction: Massive new opportunities await insurance agents and advisors in the property/casualty, life insurance, annuities and health benefits space in 2024. You read that right — you’ll have a shot at unprecedented growth next year, even though most industry analysts have made the not-so-bold prediction that insurers will continue to operate in an inflationary environment, contend with economic uncertainty and manage their businesses through major catastrophic events in 2024.

The fundamental challenges remain, so agents in Florida will still struggle to find affordable coverage for homeowners, and homeowners in other regions where natural disasters occur more frequently will feel the pinch. As insurance costs continue to rise, more homeowners who can afford to do so will choose to self-insure. However, despite all this doom and gloom, better days are ahead of us thanks to data.

Even if your book of business is heavy on coastal properties in hurricane-prone areas or regions with elevated wildfire, flood or grid-failure danger, data is poised to transform the insurance market in ways that will make it more competitive. This will provide opportunities for agents who leverage new data sources and technologies. Not everyone will be a big winner next year, but for many insurers, 2024 will be the year data finally starts to pay off. Here’s a look at three ways data will work for you in the year ahead.

1. High-quality data from multiple sources will accelerate accurate risk assessment. Insurers can now tap into vast amounts of data from more sources, including publicly available and real-time satellite and weather data, water table data and fire alert information. They even have access to better analytics. This means the ability to pinpoint risk down to the household level is finally within reach for P/C insurers, helping them more accurately gauge risk, combat fraud and work with insured populations to reduce losses. Insurers also have faster access to medical records and health data, enabling broker agents to provide accurate life and health insurance quotes more quickly, even for policyholders who may be affected by chronic conditions.

2. Data and generative AI will enable highly personalized communication in real time. Insurers now have an opportunity to add advanced generative artificial intelligence tools to their digital ecosystem, taking advantage of all the data they’ve amassed to communicate with policyholders in real time and in meaningful ways. Generative AI enables highly personalized and specific communication, from the initial quote and underwriting to catastrophe alerts and claims adjudication. Whether in a P/C, life, annuity or health benefits context, AI-driven technologies create an immediacy in the policyholder-insurer dialogue that improves the customer experience and adds genuine value.

3. Data will empower the entire distribution network. Higher volumes of accurate data from a variety of sources combined with advanced AI tools will supercharge the ability to shop for coverage and produce quotes. It will also make it simpler for insurers to help policyholders fully understand their benefits. There are more options now in certain regions as incumbent insurers shift focus away from high-risk policies. New market entrants are overturning traditional business models, banking on the idea that their superior ability to analyze data will enable them to identify risk more accurately and offer new options. It won’t always pan out for those companies, but an expanded marketplace is an opportunity for agents and brokers to line up more specific quotes and attractive options.

The insurance industry has invested heavily in data and technology, and use of these tools has fundamentally changed the way we work. The volumes of information that are now available, combined with astounding new technological capabilities, are about to change the industry in ways we are only now beginning to perceive.

Insurers who understand this opportunity and take advantage of emerging solutions to improve risk assessment, streamline communication with policyholders and offer a better customer experience will continue to operate in an environment with many of the same challenges they faced in 2023. But they’ll be better prepared to succeed because their investments in new technology and data will finally start working for them in 2024.

Tara Kelly is the founder, president and CEO of SPLICE Software. Contact her at [email protected].

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