Insurers plan to spend more on analytics, BI
While insurers’ recent analytics projects have shown steady progress in innovation, the development of artificial intelligence, big data platforms and the Internet of Things indicates carriers must deploy these technologies even faster to keep up, according to a new study by Strategy Meets Action.
The report, “Data and Analytics in Insurance: P&C View Through 2020,” finds 92% of the 87 carriers surveyed are funding analytics initiatives in 2017. However, only a small number are leveraging data from IoT, wearables and drones, which are largely considered the emerging technologies of choice in extracting information for claims, underwriting and loss prevention, the researcher says.
Unsurprisingly, SMA also determined insurers with premiums over $1 billion are more advanced in data usage than their smaller counterparts. Personal lines carriers are also ahead of commercial lines, though the entire industry is working to move beyond basic business intelligence, it says.
“Given the vast quantities of emerging data, only new platforms and tools can successfully deal with it,” said Karen Paul, principal at SMA, and the study’s author. “Traditional analytics skills can handle foundational BI. But insurers, particularly in the large, complex organizations with multi-layered analytics needs, recognize that new skills are pivotal.”
The key challenges for the industry in applying advanced analytics remain relatively unchanged as inflexible legacy systems, lack of internal data skills and unclear strategies causing a conflict in priorities still plague businesses. SMA suggests insurers actively recruit necessary talent to accelerate BI adoption and seek new data sources, whether from industry consortiums or insurtech partnerships, to rectify those problems.
“The critical issue across both segments [personal and commercial] is that spending on data and analytics is not ‘once and done,’” wrote Pauli. “Given the urgent needs, almost all insurers should be assessing budgets for increases in spending above what the averages suggest.”