A long and winding road may be an apt description of the path Jeremy Lin took—from college point guard to being cut by two professional basketball teams to sleeping on his brother’s couch to being the supernova providing a ray of hope for basketball fans.
But this path less-traveled also provides a lesson for businesses everywhere, including all of us in the insurance industry.
As one sportswriter noted, Lin almost never got his chance because “so-called experts are always looking in the same places.”
That represents a very real problem in business decision-making called confirmation bias. We tend to believe past performance does guarantee future results, so we go with what works because it has always worked.
That may no longer be enough in this competitive environment, which in itself may be one reason for the rapidly expanding use of advanced analytics by insurers. Advanced analytics help allow us to overcome the biases inherent in human judgment, and the results can be outstanding. It can help a business interpret what is happening, prepare for what will happen and help shape the future it wants to happen.
Advanced analytics involve the use of modern data mining, pattern matching, data visualization and predictive modeling tools to produce analyses and algorithms that help businesses make more effective decisions. With this foresight, analytics can help determine which events may have the most impact on the enterprise as a whole.
Predictive analytics is now coming into its own both because of the findings of cognitive science and behavioral economics and also because of a recent and rapid proliferation of huge databases, cheap computing power, and advances in data acquisition, aggregation, visualization, applied statistics and machine learning techniques.
My colleague John Lucker and I recently authored a Deloitte report called "Forward Focus: Analytics – Turning Data into Dollars." We mention that companies that put advanced analytics into place have experienced or expect to experience some or all of the following:
In real life, advanced analytics can have a positive impact in just about any area of an insurer’s operations. As an example, one P&C carrier applied advanced analytics to its claims operations. A projected reduction in loss costs of 8 percent on an annual recurring basis was just one of the positive outcomes .
That’s called playing to win.
Howard Mills is a director and chief advisor of the Insurance Industry Group of Deloitte LLP and can be reached at firstname.lastname@example.org.
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This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.
The opinions posted in this blog do not necessarily reflect those of Insurance Networking News or SourceMedia.
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