Strong demand from Americans fleeing apartments or upgrading to more space pushed home prices from an average price of $247,000 in February 2020 to $271,000 a year later, according to Zillow. Massive shifts like this present insurers with a once-in-a-generation opportunity to sell their products, and using data is one of the best ways to focus on the right targets and the right time -- as they make their purchase decisions.
However, the movement toward data is often accompanied by an unhealthy euphoria. The solution is not simply “more data,” despite what many providers seem to be pitching.
In an economy with 260 million smartphone users together creating billions of new data points every day, the challenge for today’s insurers isn’t buying or gathering more data; it’s making sense of existing data.
Scores of companies credibly claim to have excellent predictive data. The question is: How do you find a partner that can connect insurers with the right data and then make sense of the information, turning it into actionable campaigns that drive business outcomes. In a world with too many choices, strategic counsel is the most valuable resource.
Ask the right questions
Selecting the right data partner is mission-critical. Below are five questions to ask a data partner before engaging:
1. Do you source data from other providers?
Reputable data purveyors will be willing to source data from other providers so they can provide clients with the best possible leads. Even if a provider doesn’t have a relationship with the owner of a particular data set, the provider should be willing to engage on your behalf to ensure a consistent data selection process that’s not redundant. There is no reason a company has to manage multiple data provider relationships itself. This is especially important for the insurance industry, where there are multiple providers of excellent “life event” data – and no single provider can claim to have a monopoly.
2. Can you provide case studies and client references that speak to the data’s performance?
Case studies are not always available – especially for fresh data that’s never been used – but they can be a helpful predictor of a data set’s value. If a case study isn’t available, ask for a client reference. In general, the more a provider is willing to share about the data they’re selling, the more confident they are in its performance. This “transparency test” is an important barometer of any potential partner.
See also: The Right Counsel for the Right Coverage
3. What data points are you able to flag? Do you have a first mover advantage?
The key point here is to go as deep as possible into the data you’re buying so there are no surprises after the purchase is made. The most valuable data include information that competitors haven’t purchased already. Is the provider offering a new way to reach expectant parents, for example? Ask your provider whether they’re offering anything unique. Beyond that, it’s important to understand exactly what you’re buying. For example, a provider might be trying to sell you a data file that identifies new movers, new homeowners, pre-movers and newly engaged, but you may only need a subset of those identifiers. When you know what somebody is trying to sell and what you already have, it gives you greater bargaining power and avoids duplication after the purchase is completed.
4. Has your data been tested – and were under-performing sources removed?
How data should be tested depends on the individual needs of your organization and what attributes are most important. The data provider should be able to explain to you how they ensure continued accuracy of their data. They also should have steps in place to validate their data sets on an continuing basis and have the necessary monitoring in place. If they know a source isn’t quality, they shouldn’t be selling it to you.
5. Will your provider provide a timestamp for the data?
Timing is everything when it comes to data, and providers should be transparent about when the information they’re selling was collected. This is especially important when buying data for time-sensitive moments, like marketing mortgage protection insurance to a new homeowner. On the other hand, it may be wise to wait a bit to offer life insurance to a new parent instead of targeting them as soon as they have a child. A few weeks can be the difference between a campaign’s success or failure. Can your provider certify that the information has the right timestamp identifying when the event occurred – or at least when the provider first became aware of the event?
When you have a deep understanding of what you’re buying and how it connects with your existing needs, the odds of maximizing the value of the asset after the transaction go up exponentially. Insurers should seek out partners who can do the hard work of identifying the right data – and then come to the table ready to turn that information into successful campaigns that drive sales.