Big data is a hot topic - but what is it and why is it so important? In this article, Head of Business Intelligence at Acquis, Antoine Gautier, looks at the role of big data for leased asset insurance, including its importance for the resilience, recovery and growth of the leasing sector.
What is big data?
Big data refers to large data sets containing a diverse range of data from various sources. Data may be structured, unstructured and semi-structured, and highly complex. While almost every business is likely to find the insights provided by big data helpful, its nature makes it impossible or very difficult to process in traditional ways.
Big data is typically analysed using specialist software that can derive powerful insights to aid strategic decision making across departments.
How does Acquis use big data?
With a global market view and hundreds of millions of live insurance policies across all major sectors, Acquis handles huge volumes of data every day. We process and analyse this data to not only gain a whole view of the market but to provide important client-specific insights.
Our big data analysis is presented to our clients in bespoke monthly reports, which our clients use to inform their decisions and strategy to optimise key performance indicators such as their market share and profitability.
“Acquis provides us with monthly reports, detailed by country and by market, that allow us to monitor our results and quickly identify the growth levers in a given territory. Equally, they provide excellent listening and reactivity on all our specific and punctual needs as well as relevant advice on our capacity to do better. It’s after all the quality of this relationship that makes a difference and makes us enjoy working in partnership with Acquis.” Karine Dufour, Head of Insurance – BNP Paribas Leasing Solutions.
Here’s a brief insight into the type of data we provide, and how our clients use it:
5 must-know stats every asset finance company should use
Our monthly client report crunches data in near to real-time to analyse many areas of performance, from fees to claims, waives to customer service. There are 5 areas of analysis, however, that typically make the biggest impact on the performance and success of every outsourced insurance management programme:
Collected fee and income
Collected fee is the monthly lessor fee that’s collected on all contracts where insurance is in place. It provides lessors with the sum of income collected for any given month, as well as the total fee collected since inception.
Similarly, monthly income is the overall lessor fee which would be earned over the term of the finance, assuming no further cancellations were to occur during that time.
Tracking the collected fee and income is important because it provides lessors with a quick view of how much cash they are collecting every month, and how much revenue they have made since inception. Lessors are also able to see how much money they will make with their current portfolio until it matures.
Knowing these figures helps planning and budgeting, as well as indicating how successful the insurance programme is. If there is any negative change in the income and fee collected, we can work with the lessor to swiftly address it.
Yield looks at the profit the insurance programme makes. It can be calculated and expressed as a percentage of the sum of the last 12 months of written income, divided by the sum of the total equipment value submitted during the last 12 months which has reached the billing cycle.
Similarly, the programme accepted yield can be calculated and expressed as a percentage of the sum of the last 12 months of written income, divided by the sum of the total equipment value covered under the programme.
To take a hypothetical example, if a lessor sends £11 million of assets a year to Acquis and generates £330,000 of additional revenue from the insurance, they would have made 3% profit on the £11 million placed, or 1.06% a year with an average term of 34 months.
Some lessors will see this yield as 1.06% profit on top of the 3% rate generated by the lease rental. Alternatively, others will see the yield as an opportunity to drop their lease rental rates to be more competitive. For example, a new rental rate of 1.94% combined with the additional 1.06% from the insurance can make them more competitive with the same profit.
Claims data is important because it provides a barometer of programme performance. This allows us to improve the quality of our product while enabling lessors to understand the quality of our service. When looking at this area, we provide data on the number of claims received since inception and the value of incurred losses. This gives the inception to date loss ratio, which will show if a portfolio is under performing with the insurance.
To keep the product working for everyone, we need to ensure the portfolio’s pricing set is sustainable for the insurer. This will make sure that the insurer has a fair rate for covering the equipment, and lessees can keep enjoying an excellent quality service and cover on their leased equipment.
We provide data on the lessor portfolio, but can also look at a specific item that could affect the sustainability of the cover for the lessor. This allows us to monitor and act on any event quickly and pinpoint any changes to the asset or asset type that needs to be adjusted.
4. Market penetration
Market penetration specifically looks at portfolio performance. We analyse by volume and by value. Penetration by volume looks at the percentage of lease agreements that are currently in force from the total lease agreements. Similarly, market penetration by value looks at the total asset value currently in force as a percentage of the total asset value submitted to the programme. *
Market penetration is an important ratio because it shows the level of acceptance of the product by the lessee, and how well the product performs. This allows us to forecast the lessor income based on their production, and to work with the lessor to adjust the pricing to find the correct balance between the cost for the service and the acceptance of the product by the lessee.
For example, a low penetration rate could be due to pricing that’s too expensive while a high penetration rate may be due to low pricing. A high penetration rate could also indicate that the asset is hard to insure with other insurers and may pose a high risk.
5. Number of leases mailed
Finally, this statistic refers to the number of new business leases that were mailed during the month, as well as the total leases mailed over the last 12 months and monthly corresponding average.
Our report also provides the latest monthly figure for the total portfolio value of the leases mailed by Acquis, as well as the total equipment value of the leases mailed over the last 12 months, including the monthly average.
Relating specifically to our Acquis Omnia and Acquis Amplio insurance solutions, the mailing volume/value is also known as production volume/value. This shows us the volume/value of assets sent to us by the lessor, which provides useful information so we can monitor the production send by lessors to forecast the lessor fee and income of the portfolio.
The production is the first information that we receive from the lessor on a weekly or monthly basis, which allows us to monitor and react to any change quickly. Changes could be due to a higher level of production generated because an additional supplier has been added to the lessor’s portfolio, while a lower volume could indicate a delay in producing a file or some seasonal holidays.
We constantly monitor and analyse this information to support or adjust our services to the lessor. This allows us to understand and find any gaps in the lessor portfolio with assets that could miss the opportunity to be protected under the asset protection services.
We also reconcile the production sent to us with the lessor production to try and identify any assets or asset types that could be insured by our services and are omitted from the files sent to us. This allows us to optimise the fee and income for the lessors and increase our services to their lessees.
Find out more about Acquis’ monthly big data client reports
To find out more about the big data we provide in our monthly client reports, please get in touch with us here.
*Which have reached the billing cycle and are eligible to be included in the penetration report.