Report: Insurers are making progress with advanced analytics
Expanding and improving the use of advanced analytics in several aspects of operations remains high on North American property & casualty (P&C) insurers’ strategies, according to Willis Towers Watson’s 2021 P&C Insurance Advanced Analytics Survey.
Across the board, but noticeably in pricing, underwriting and claims, insurers reported that their use of and plans for advanced analytics have been reignited over the past two years.
“Outside a small set of respondents who express doubts about the business case for advanced analytics, either due to concerns about cost or the ability to explain outputs to either management or customers, the North American P&C market still looks set on a course for increased use of advanced analytics,” said Lisa Sukow, director, North America P&C practice, Insurance Consulting and Technology, Willis Towers Watson. “There is continuing optimism from the companies surveyed about the impact that advanced analytics has had on both top- and bottom-line performance.”
Increasing the use of advanced analytics in the insurance industry
According to half of respondents, time is the biggest enemy, but data management, handling, and warehousing are also key factors mentioned in slowing or delaying progress. Despite most companies facing issues around prioritisation or resource constraints, strong pockets of progress have occurred in the two years since Willis Towers Watson’s last survey.
“The pandemic has certainly increased time pressures to do other things and delayed some investments in support of advanced analytics; however, it hasn’t affected plans to any great degree,” said Nathalie Bégin, director, North America P&C practice, Insurance Consulting and Technology, Willis Towers Watson. “Other reasons for some of the struggles that insurers have faced in keeping their ambitions on track lie closer to home. These include IT infrastructure, the dexterity with which they handle data and corporate cultural barriers.”
While companies recognise there is room to increase the use of advanced analytics in rating/pricing, bigger leaps are anticipated in the underwriting process, including automation levels and decision support employed. Moreover, uses of advanced analytics in claims have accelerated at a faster rate, partially because there are more gaps to fill in capabilities.
Over half of respondents describe themselves as having active working relationships with the InsurTech community, and 10% are fully commercialised.
Sukow added: “Many companies still hold huge amounts of useful but unexploited internal data. With the right technology, data available from sources such as images, unstructured claims, underwriting and customer information, and text mining increasingly have the power to transform product propositions and profitability.”
