To realize their full potential, analytics investments must be brought down from their ‘visionary’ pedestal and used to create a structured program of activities that can be monitored and measured, according to “All That Glitters is Not Gold: How to Build a Business Case for Analytics in Commercial Insurance,” a report from Xuber, an insurance software vendor.
“The use of predictive modeling solutions will enable insurers to more accurately predict customer behavior or trends, manage risks, improve fraud detection, reduce claims leakage, improve underwriting profitability and assist with product pricing,” Gartner said, as quoted in the report.
The report describes the role of analytics in enabling insurers to make decisions intended to increase their bottom line and says building a business case for analytics requires a process of continuously demonstrating value.
As quoted in the report, Celent suggested “insurers consider purchasing a predefined insurance data model from a data mastery system or data master services provider with deep experience in data mastery for insurance.”
The report says a well-defined business intelligence strategy will offer context for analytics initiatives and answer the following questions:
“Used in the right way, analytics can deliver insight and enable flexibility, allowing insurers to intelligently plot and identify trends and in turn make reliable predictions about the future,” said Richard Clark, head of business development and specialist commercial, Xuber.
Further considerations in the report include:
“One of the fundamental considerations when it comes to analytics is trust,” Clark said. “Similar to the dawn of social media — when organizations were reluctant to let their own people share their voice with the outside world for fear of misuse — analytics is about trusting your people to do the right thing with greater business insight. Once you have established that, it will open up a realm of possibilities to improve business efficiencies.”
For commercial insurers, demand for analytics is being driven by the desire to better monitor and understand customers throughout the insurance lifecycle, Xuber said.
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