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Unveiling Market Niches: Data Mining for Commercial Segmentation

Learn to identify strengths, map to suitable segments, and validate selections. Utilize various data sources to find profitable market segments. Analyzing industry data enhances marketing strategies.

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Unveiling Market Niches: Data Mining for Commercial Segmentation

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  1. Where Is My Market? Mining Data to Find a Niche Commercial LinesSegmentation Workshop Lisa Sayegh Presentation to the CAS March 2003

  2. How? Identify your strengths Map to appropriate market segments Identify high quality prospects

  3. Company Strengths • Identify areas with performance success • Function within company • Industry-specific (or process-specific) knowledge • Recognition by industry segment • Sales distribution channel • Benchmark

  4. Identify Market SegmentsThat Utilize Your Strengths • Define and select market segment by: • Industry • Line of insurance • Demographics - geography, sales • Business parameters - size of risk

  5. Validate Segment Selections • Assess selected segments • Amount of total premiums • Profitability • Trends • Insurance Concentration

  6. Additional Considerations • Cost to sell to market segment • Cost to educate market • Different regulations • New trends to take into account • Cross selling

  7. Segment Successes • Linking selected segments to agent territories • Overlay agent territory to identified market segment • Identified suitable regions forexpansion of program

  8. What Data is Available? • Business information • Insurance Statistics • AM Best • Property & Casualty Stat Agents • State Insurance Departments • Other Insurance Information

  9. What Data is Available? Cont’d • Government information • Association information • Forecasting News • Your own data

  10. Using Multiple Data Sources • Are you comparing like for like? • Headquarter vs. location specific • Non-employers • Entire insurance market?

  11. Using Multiple Data Sources • How to integrate data across data sources? • Industry identification • Business size • Size of risk • Specific business

  12. Industry Classifications • Standard Industrial Classifications • Over 900 4 digit SICs or industry slices • Primary SIC • Replacement - North American Industrial Classification codes • Government information in NAICS only • Industry hasn’t responded yet • Advantage over SIC

  13. P&C Insurance Profitability Data • What’s available - • Aggregated actual performance data used as basis for pricing by insurers • ISO collects over 70% of commercial lines market w/o WC; have to be a participant to access • Data defined by classification code • Differs by line • Reflects risk

  14. Actual Insurance Information • Insurance performance • Law of large numbers • Actuarial Analysis e.g. development • May not reflect entire marketfor all lines • New lines with insufficient data • Business characteristics may not be available

  15. Industry Level Data Better SuitedFor Marketing • Data on common level; Compare across lines • Drill down capability to new markets • Can identify business trends Data by Industry needs to be developed; insurance information not available from stat agents.

  16. Analyzing With Your Own Company Data • Append SIC or NAICS • Develop a way to append additional business variables • Data that you may already be capturing

  17. Provide High Quality Prospects • Focus in on identified customer characteristics • Premium estimates • Geographic areas • Business size • Corporation Type • Additional data sources for specialty programs

  18. Where Is My Market? Mining Data to Find a Niche Commercial LinesSegmentation Workshop Lisa Sayegh Presentation to the CAS March 2003

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