The Advanced Analytics Insurance Leaders Need

Many insurance companies – both mid-sized and at the enterprise level – have already adopted some advanced analytics to help reduce costs and mitigate risk.

These industry leaders machine learning (ML) and artificial intelligence (AI) can have a tremendous impact on…

• Underwriting, by streamlining the process of evaluating risk and determining premiums.
• Claims predictions, which can be improved with more accurate customer profiles.
• Fraud detection, thanks to automated case detection that requires fewer resources.
• Claims processing, by making it faster and increasing visibility into the process for all stakeholders.

Advanced analytics can help insurance companies reduce costs across the board and boost revenue by optimizing offerings. These possibilities may sound lofty, but there are concrete ways you can choose to implement advanced analytics to better serve your policyholders and achieve ambitious goals.

The Advanced Analytics Insurance Companies Need to Improve Fine-Grain Policy Management

On the path to digital transformation, if you’ve already aggregated disparate data sources, you’re halfway to more personalized marketing programming.

To succeed in an increasingly competitive insurance marketplace, it’s critical that you put customers at the center of everything you do. By launching a personalized marketing strategy backed by the insights your advanced analytics provides, you can strategically target prospective customers and engage them with accurate, compelling offers.

Advanced analytics can also help you influence positive consumer behavior by determining what behaviors may contribute to claims and incentivize customers to avoid those activities. The most popular example of this may be the “safe driver” discounts that car insurers offer to policyholders who maintain a spotless driving record. With advanced analytics capabilities, you can locate similar opportunities for every policy type and improve customer retention.

As importantly, advanced analytics will help you cross-sell policies to increase customer engagement. With a better understanding of who your policyholders are and what they need, you’ll be more capable of offering them the insurance coverage they need at the right moment in their customer lifecycle.

Better Risk Calculation Leads to Better Risk Mitigation

Machine learning is an incredible boon to insurance companies. Whether you’re at a company with decades of customer data on hand or you’re at an upstart that’s looking to maximize the insights you can gain from third-party data, ML can get you the insights you need faster than your own team of data analysts could.

ML is an invaluable asset when it comes to risk calculation, and this applies to calculating risks to determine current premiums and to major events like COVID-19.

In the past year, insurers with advanced analytics were able to move faster to update their risk calculations, by incorporating publicly available political, meteorological, and epidemiological data into their algorithms.

Perhaps more tangibly, they were also able to deploy tools that automated processing during months of relentless high volume claims volume. On the back end, these capabilities also enable insurers to improve their decision-making when it comes to litigation and make smarter, more resilient investments to secure their future.

Prepare for an Uncertain Future with Better Predictive Capabilities

While advanced analytics can help eliminate revenue leaks and improve customer retention, its potential to improve how insurers evaluate risks associated with climate change is even more important in the long-term.

A recent study from the University of Colorado Boulder and Boise State University found that “more than half of the structures in the contiguous United States are exposed to potentially devastating natural hazards.”

As natural disasters intensify in volume and impact, it will be critical that insurers take heed of the other major insight the authors of this paper found: “[r]isk assessment can be improved by considering multiple hazards, mitigation history, and fine-scale data on the built environment.”

By leveraging advanced analytics, insurers can incorporate meteorological and macroeconomic consequences into investment and underwriting decisions, which extend to individual policy premiums, as we’ve already seen in Florida, where home insurance premiums have been reshaped by the rising frequency and intensity of hurricane landfalls.

To meet the coming challenge of climate change with appropriate coverage without losing customers to higher premiums, insurers need the support of advanced analytics tools to ensure their strategy.

Empower Your Team with Better Insights without Increasing Their Workload

If implementing advanced analytics sounds like more than your team can add to its plate, consider bringing in outside experts to help turn your team’s data lakes into dashboards that deliver the actionable insights your executives need.

This approach can help you create better predictive models to mitigate risks and streamline processes with automation to reduce operational costs in the near term.
From the health of your investment portfolio to your customer retention rate, you can’t afford to put off implementing advanced analytics for another five years. To find out how to get started, reach out to our team of experts today.