With the way technology has been improving, it would inevitably begin impacting every industry out there—even the insurance industry, where developments such as predictive analytics have been making waves.
Predictive analytics is a form of machine learning that uses data (usually in the form of statistics and historical data) and algorithms to identify patterns and future possibilities. When it comes to insurance, that can make a world of difference for insurers and clients alike.
How It Works
As a whole, predictive analytics has been a growing trend, with many different industries trying unique ways to apply the technology. Predictive analytics has become so common that anyone spending any time online has likely come across it. Predictive analytics play a part in ad generation, search engine optimization, and website recommendations. And it’s all based on an individual user’s history.
Predictive Analytics Meets Car Insurance
When it comes to car insurance, there’s a lot that predictive analytics can do to help improve the industry. For one thing, it can (and will) allow for a more personalized experience. Gone are the days when an insurance plan was one size fits all.
These days, machine learning can grind through a driver’s history and develop a custom insurance plan uniquely suited to them. For example, a safe driver with a record of following speed limits, wearing seat belts, and avoiding tickets can rest easy knowing that they got the best deal possible.
Applications of Predictive Analytics
The possibilities for predictive analytics don’t end there. That’s the beauty of this customization engine. Insurance companies can use this technology to compile crash data and even flag fraudulent claims. It all depends on the data they feed the program.
Marketing campaigns have already begun to make heavy use of predictive analytics, and soon insurance companies could be doing the same thing. Let’s go back to that online example from earlier. A person hops online, does some browsing, and calls it a day. The next day, they get an email advertising a sale on an item they were looking at. This is not a coincidence but rather a carefully orchestrated plan.
Insurance companies can do the same thing – marketing the right plan to the right clients and knowing how to best approach them. Some clients prefer to be approached via email, others via phone or text. Machine learning can help process that information and create a personalized plan for thousands of potential clients.