As we enter the last quarter of 2014 it has become apparent that, as predicted at the end of 2013, the big 4 (Social, analytics, data and mobile) are becoming prevalent in the insurance industry. Big data and analytics have been the topic of discussion at insurance conferences this year with Salesforce announcing an improved analytical tool, Wave, at their annual Dreamforce event.Big data is a buzzword used to describe a large volume of data that outstrips the capacity of traditional data management and analytical tools. Analyzing big data can predict future trends, based on historical data, determining potential market changes. The goal of big data and analytics is to make the industry more efficient, lower risk, lower costs and provide better access to information.
Established insurers have access to a lot of historical information relating to claims. A recent article details how insurers should use this wealth of information to their advantage. Historical data patterns can predict the future, and the more information available, the more accurate predictions may be.
Analytical information better equips insurers to:
• Better assess risk
• Achieve profitably while underwriting claims
• Profile customers
• Improve reporting capabilities
• Score claims based on real-time information
• Improve modeling and planning predictions
Insurers with access to information spanning over a long period can predict market changes better than those who don’t. This allows them to lead the market of the future, offering them a clear competitive advantage. Smaller companies can compete by remaining flexible and sensitive to market changes.
Although actuaries have been analyzing data for market insight for centuries, life and disability insurers have been slow to adopt this capability up until now. A recent study by Novarica showed that less than 20% of life insurers use real-time scoring. Real-time scoring allows claims analysts to rank claims based on risk, allowing them to focus on high-risk claims. This saves time and resources internally, while increasing claim-processing efficiency to improve customer satisfaction.
As more insurers analyze historical data, trends and patterns will emerge encouraging improved efficiency, reduced resources, and improved internal business processes. So the only question remaining is: Are you ready to take on Big Data and Analytics?