The insurance industry is no longer simply about providing a financial safety net in case something goes wrong. Now, clients want more. They want help leveraging information for smarter decisions about which companies to do business with, which sectors to target for growth, and what credit terms to offer.
Insurance providers collect a wealth of information about how industries are performing, payment patterns, how many insolvencies are occurring in specific industries and regions, and more.
This information lets businesses expand into new sectors where they may not have as much experience.
It gives them the confidence and knowledge they need to proceed, and to be better prepared. By taking away some of the uncertainty, it helps businesses achieve success faster in new sectors, which is essential for growth in a tight market.
Many business leaders aren’t aware of the power of the information that’s now available and how it can drive faster, smarter decision making for improved business outcomes. For example, business leaders can review payment trends that could offer an early warning that their customers are likely to start experiencing some payment difficulties.
These decision makers can use the same information to identify potential new industries or sectors to target, in order to offset potential losses from under-pressure customers. And because of the accuracy and timeliness of the information, they can do this before any of their own customers has missed a payment.
While insurance providers have always had this information to some extent, increased digitalisation has made it easier to make sense of this data and provide it to customers in a way that lets them understand and act on it. With accurate information delivered sooner, decisions can be made in a single day rather than weeks or even longer.
As the insurance market becomes more customer-focused, the way insurance providers are offering information has changed. In 2018, it’s likely that insurers will continue to invest in changing systems to make information available more readily. Using Big Data to provide more up-to-date information to brokers and clients is key.
The short-term benefit of this is that insurance providers can reduce the average claims turnaround to two or three days. In the medium-term, customers will be able to access information directly, which will dramatically speed up their decision-making process.
It’s also likely that the economy may drop off in the next year or so, and businesses need to make sure they’re prepared for that eventuality. That means monitoring what’s happening in their business and looking carefully at payment trends not just for their own customers but across the industry.
While a business’s customers may currently be paying on time, an increase in late payments across the industry could indicate trouble ahead, and it may benefit to change credit terms or diversify the risk by focusing on winning customers outside that industry.
If it seems likely that some customers may struggle to pay on time in the near future, businesses should implement trade credit insurance sooner rather than later to protect cash flow from the knock-on effects of late payment.
It’s also valuable to use the available information to look more broadly than at just customer or industry trends but also at payment trends in specific regions or countries. This is much easier to do than it has been in the past.
This means businesses that fail to leverage information for smarter decisions may find themselves struggling to compete effectively, as their competitors use the wealth of information to navigate changing markets and conditions more strategically.