Analytics: Actionable and Integrated

In a time of meager growth and increased competition, insurers increasingly are looking to data and analytics for an edge, according to industry experts at ACORD LOMA earlier this week.

“Growth is going to come from competition for policyholders,” said Ben Moreland, senior business architect at Innovation Group in his presentation “Integrating Analytics: Improving on Insurance Core Systems and Processes.” Leveraging internal, external, structured and unstructured data to gain business insight into increased revenue, decreased expenses and improve the ease of doing business could offer a strategic differentiator that offers a path to growth in a difficult operating environment.

Data quality is at the root of success for reporting, analytics and decision-making Moreland said. According to Moreland’s model of data mastery maturity, however, 90 percent of insurers now live in “data chaos” and data-driven silos are common. Healthy enterprises are achieving centralized enterprise data, Moreland said, and the goal of being a data-driven enterprise, or better yet, an innovative leading enterprise is so far elusive for most, he said.

Analytics are gaining a deep a foothold in the P&C industry, according to as-yet-unpublished research presented by Strategy Meets Action. In their ACORD LOMA presentation, “Actionable Analytics at the Point of Decision,” Mark Breading, SMA and Steve Robins, VP FirstBest, revealed that 83 percent of P&C personal lines plan to increase spending on analytics, as do 85 percent of commercial P&C insurers.

Robins and Breading discussed the importance and increasing availability of data for more-profitable underwriting. He also stressed that data has a context, a point he illustrated by offering a shoe factory, with an excellent safety record, for an underwriting exercise, while withholding the fact that it was adjacent to a bomb factory.

The industry is making great progress toward moving data to the front end, Breading said, where embedded analytical capabilities for underwriters are streamlining workflows and increasing the efficiency and profitability of underwriting.

“Analytics are thee competitive advantage in the insurance industry,” Breading said. “Those companies that figure out how to harness your data and the external risk and demographic data that is out there in the world now, those who can wrap the right kind of BI and analytics tools around that and drive them to the point of decision, they are the ones who will have a real competitive advantage.” And the winning formula for risk evaluation includes using hazard, location, analytics, expertise and visualization tools.

Through improved collaboration, integration and data capturing, specialty insurer XL Group experienced a 40 percent improvement in underwriting productivity, Breading and Robins said, and ICW Group Insurance Companies increased revenue and underwriter productivity by 300 percent, and increased small-account retention by 85 percent.

See also: Improved Collaboration, Integration and Data Capturing 

Trends in underwriting and risk evaluation, Robins and Breading said, include:

• The availability of more hazard data
• Automated prefill
• Rules-based systems
• High-precision geocoding
• By peril rating
• Risk scores for specific aggregate perils
• Advanced visualization
• Aerial CAD
• Extending loss control initiates
• CAT modeling revolution

The technology for analyzing and integrating these functions at the point of analysis increasingly are available, but there now are other challenges to overcome, they said, including data quality and incompleteness, lack of skills and experience, legacy core systems and cost of managing data.
Data problems, Robins and Breading said, include:

• Incomplete, inaccurate or unavailable data
• Time consuming, manual and inconsistent processes
• Information silos and lack of integration
• Time consuming to bring data into process

Robins and Breading five items will help drive underwriting excellence.

1. Creation of a data hub
2. Data insight at point of decision
3. Data-driven processes and automation
4. Shared data across the team
5. Expanding use of data

“This is about innovation, it’s about rethinking,” Breading said. “We’ve been doing underwriting for years and years. And we don’t want to throw that away. We have a lot of expertise and knowledge about how to asses risks, but we have to step back and see that there is a lot of new data available and a lot of new models we can tap into to better understand risk. We can get much more granular, and there are a lot of ways to package that information to get it to the point of decision. And so, how do we do all that so we are doing underwriting better than our competitors. That’s what it comes down to.”