How far will use of advanced analytics be embedded into the decision-making process at insurance companies in the coming years? According to a survey of attendees at the International Insurance Society’s Annual Seminar in Toronto, pretty far.
The question of whether insurers are likely to transform data gleaned from emerging Big Data technologies into actionable insights was posed by Jamie Yoder, principal, PricewaterhouseCoopers LLC's Diamond Advisory Services, during a presentation of his new research paper, Future of Insurance 2020. Yoder presented the attendees with five separate scenarios regarding the use analytics. The continuum ran from a rejection of the technology due to a glut information, to a scenario where data-driven decision making becomes the norm. Attendee responses congregated on the latter side of the spectrum, with 49% indicating that they expected use of sophisticated analytics to become the key determinant of competitive differentiation for insurers in the future. Moreover, 14% went further and indicated that they expect that analytics progresses to a point where all key decision-making has been automated and insurers shift attention from traditional underwriting toward preventative and productivity gains.
“Clearly there is a huge belief in the ability to make use of more data,” Yoder said upon viewing the results.
And more data is indeed in the offing. Yoder noted the rise of the “Internet of Things” where imbedded sensors in mobile devices and other objects such as vehicles will provide insurers with increasingly rich, increasingly granular data streams. He said that this increased ability to collect data has fortuitously coincided with better technology to interpret it, adding that while the exploits of IBM’s Watson on Jeopardy were fun, they are a serious indication of insurers’ potential to interpret unstructured data.
Chris Giles, EVP, International Field Operations Manager, Chubb UK, sees the move toward data-driven decision-making altering the industry in other ways. “I think the exciting thing is for insurance to get hold of its processes and see how their operating structures can be made to work on a global basis,” he said. “It’s almost passé to say ‘we use Bangalore for accounts receivable and do our main underwriting in Dallas while talking to the customer in London.’ We have to look for commonalities in the business and let the technology run that for you.”
Likewise, Yassir Albaharna, CEO, Arab Insurance Group, saw technology facilitating an increasingly global industry. “I am very optimistic about the potential for market penetration due to mobile,” he said. “It’s going to allow us to offer different classes of insurance and reach people who were traditionally very difficult to reach.”
