Analytics is playing an increasingly important role in customer acquisition for the life/annuity industries, according to a new study from Strategy Meets Action, as insurers across all sizes were found investing most heavily in analytics for product development (70 percent), new business/underwriting (64 percent) and marketing (54 percent).
While SMA’s survey found that about one in four insurers are spending 10 percent or more of the IT budget on data and analytics (26 percent of group companies, 25 percent of individual), about the same amount were found allocating less than five percent. According to SMA, “these companies will find it difficult to compete in coming years as their competitors gain new levels of insight.” The average life/annuity insurer invests approximately 8.5 percent of the IT budget on data and analytics. Approximately the same amount is invested by business units—with funds coming from their own budgets. In total, life/annuity insurers in North America spend almost $5 billion per year on data analytics, and 67 percent of life/annuity insurers plan to increase analytics spending over the next three years.
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