Alkami Technology Inc
07/31/2024 | News release | Distributed by Public on 07/31/2024 16:45
Transaction Enrichment: The Impact of Inflation On Insurance
After the transaction data cleansing process is completed, analysis can begin to unveil behavioral trends
Alkami's researchers recently took on the task of using a transaction data cleansing process to evaluate the state of insurance inflation, based on the payments made to insurance providers by account holders from a panel of regional and community financial institutions.
This transaction enrichment analysis process focused on finding insights to help financial institutions better understand behaviors and trends around insurance and, ultimately, clarify how their own curated offerings can support their end users.
From consumers to corporations, the insurance market has not escaped the impact of inflation. Traditionally, premiums are expected to increase in relation to rising costs of the goods and services they protect. While the current inflation rate has improved compared to mid-pandemic figures, the effects of increased costs continue to impact pricing for everything from rental housing to automobile purchases.
Auto Insurance Premium Trends
As auto sales showed signs of going full steam ahead from 2022 to 2023 with a 11.6% increase in the U.S., consumers demonstrated that challenging economics are not stopping purchases. This occurred in spite of rising new car prices, where the average new car buyer is now paying 57.1% more per month for an auto loan than in December 2019.
Essential to new and used car owners alike, the need for auto insurance remains strong. Alkami researchers analyzed the data panel and found that automobile insurance premiums are increasing, and at significant rates. From January 2022 to May 2024, the average monthly cost increased by 27.8%, from $194.96 to $248.70.
Considering the increase in insurance rates alongside higher pricing, interest rates, and fuel costs, vehicle ownership is costing more given the past few years of market change.
Key Takeaway
Financial institutions selling auto insurance can benefit from analysis of transaction data by identifying those account holders making payments out to competitive insurance companies. With prices on the rise, vehicle owners may be more likely to consider switching for a savings, while financial institutions find new ways to expand their relationship with each account.
Financial institutions selling auto insurance can benefit from analysis of transaction data by identifying those account holders making payments out to competitive insurance companies. With prices on the rise, vehicle owners may be more likely to consider switching for a savings, while financial institutions find new ways to expand their relationship with each account.
The Business of Business Insurance
The global commercial insurance market is valued at a staggering $874.4 billion. While business insurance can help companies obtain coverage for a variety of operational concerns, inflation can also impact the cost savings available to these companies.
Alkami researchers revealed in the data that average monthly commercial insurance premiums are on the rise across both general commercial insurance and liability insurance companies.
Data shows the average monthly premium has increased by 74% in the last 30 months.
Key Takeaway
Financial institutions may want to build a relevant audience and target small business and commercial account holders in their portfolio who may be candidates for a campaign on insurance products. By understanding small business and commercial insurance needs for a given account, financial institutions may be able to pinpoint other areas where they can support these account holders with other financial services.
Financial institutions may want to build a relevant audience and target small business and commercial account holders in their portfolio who may be candidates for a campaign on insurance products. By understanding small business and commercial insurance needs for a given account, financial institutions may be able to pinpoint other areas where they can support these account holders with other financial services.
Rental Insurance in a Costly Renters' Market
Not immune to the effects of inflation, renters are experiencing increasing costs in their rental payments. From June 2023 to June 2024, rent increased an average of 5.1%.
Alkami researchers revealed in the data panel that rental insurance premiums have remained steady with an average cost of $20 per month, despite the increase in rental payments mentioned above.
Key Takeaway
Those who opt to pay for renter's insurance typically do so as a recurring monthly payment. This provides an opportunity for financial institutions to engage with the renters in their account holder portfolio and craft dedicated marketing messaging with offers for a debit or credit card with the financial institution, encouraging transfer of the payment. Banks and credit unions can also develop a renter marketing persona and provide messaging and products catering to this demographic. This can include suggestions for how to save for a downpayment for a home or offers regarding competitive mortgage products for first-time home buyers.
Those who opt to pay for renter's insurance typically do so as a recurring monthly payment. This provides an opportunity for financial institutions to engage with the renters in their account holder portfolio and craft dedicated marketing messaging with offers for a debit or credit card with the financial institution, encouraging transfer of the payment. Banks and credit unions can also develop a renter marketing persona and provide messaging and products catering to this demographic. This can include suggestions for how to save for a downpayment for a home or offers regarding competitive mortgage products for first-time home buyers.
A Data-Driven Strategy
In conclusion, transaction data provides intelligence which can support financial institutions' efforts to understand their account holders deeply and glean the best ways to serve them.
From product strategy to messaging, having a data-driven strategy with transaction data as the foundation will empower financial institution leaders and marketers to make informed business decisions across all operations within the bank or credit union.