West Monroe Partners, a full-service North American business and technology consultancy, today announced the results of a survey that showed that only about one in 10 insurance executives are certain that their organizations are realizing the full benefits of advanced analytics. The survey shows that the industry has yet to join the big data revolution — and reveals an immense opportunity for innovative insurance leaders.
The survey, Data Driven Insurance: Harness Disruptions and Lead the Way, conducted with more than 120 respondents in fall 2016, found that just 11 percent of respondents strongly agreed with the statement that their organizations were fully realizing advanced analytics’ benefits, while only 46 percent somewhat agreed. And respondents who had implemented advanced analytics said they were struggling to show return on investment.
“Improvements in customer experience have been tied to increased revenue, and insurers have a market imperative to create highly-impactful customer interactions via customized (or personalized) products and services,” said Carrie Camino, Director of West Monroe’s Insurance Practice. “Using a practical approach to focus analytics on enhancing the customer experience, insurers can truly harness their data to increase market share. It’s an exciting opportunity for us to help our clients evolve their customer experience model.”
Respondents, including executives from life and annuity carriers, property and casualty carriers and brokers, identified the challenges in implementing advanced analytics. They cited concerns about data quality and accuracy, analysis paralysis and segmentation issues.
In addition to assessing the state of advanced analytics across the industry, West Monroe’s report provides practical guidance for executives seeking to gain a competitive advantage.
“With dramatic decreases in the cost of processing and storing data, the table is set for companies in the insurance industry to take full advantage of analytics,” said Greg Layok, Senior Director and leader of the company’s Technology and Advanced Analytics practices. “Smart executives understand how important this is – and the significance of this moment – as the industry faces a soft market in standard lines, increased bottom-up disruption from technology-enabled competitors and increasingly demanding customers.”
Here are some of the report’s top takeaways:
- Data’s opportunity as a business accelerator: About a quarter (27 percent) of respondents named improved customer experience as the greatest benefit of advanced analytics. Twenty-one percent said they could reduce claims costs and 14 percent chose increased sales.
- Major worries about data quality: Nearly two-thirds of respondents said data quality and accuracy was the greatest challenge associated with advanced analytics. About half said inaccurate data was the greatest risk.
- Current focus on claims modeling and reduction: Fifty-one percent of respondents said they already used advanced analytics in that area; 42 percent said they used actuarial model testing.
- Lack of investment in disruptive data sources: Seventy-six percent of respondents said they were not investing in disruptive data sources, though about half of those respondents said they were considering making an investment in secondary sources that would augment their own data.