Harnessing the power of data and analytics for insurance – IBM
Article Synopsis :
The insurance industry is rich in data from various sources including internal data, structured data and external sources of unstructured data such as real-time weather feeds, public records, emails, and wearables. The question is: How can insurers leverage this data to successfully compete in a dynamic marketplace?
IBM’s white paper “Harnessing the power of data and analytics for insurance” explores opportunities available to the industry using data and analytics to extract, integrate and analyse larger volumes and varieties of data, from various sources including call-centre notes and voice recordings, web chats, telematics and social media.
According to the paper, data and analytics (D&A) can help the industry achieve the following:
1. Improved Customer Insights
- Customer Engagement by building an experience specific to the customer, which directly contributes to customer retention. Predictive analytics has the potential to judge a customer’s likelihood to switch and to mitigate retention risk.
- Cross-sell and Up-sell products by monitoring the customer and proactively providing the best offer at the right time.
- Digital Enablement by providing customers with a platform enabling valuable interaction in real-time adding to greater retention and lead generation.
- Distribution Optimization by employing D&A tools to improve distribution through effective support models for existing producers as well as powerful analytics to attract, retain and optimize the producer workforce.
2. Innovative Business Models
- Claims Optimization and Fraud Prevention by building insights on claims with regards to expected duration and severity, litigation propensity, routing, fraud, subrogation and case reserves. Predictive analytics can help categorize risk and analyse data patterns to identify trends and fraud incidence related to the business.
- Leveraging Internet of Things (IoT) by aligning D&A strategies with customer lifestyles. Sensors and wearable tracking devices help insurers gather data and interact with customers at every point. This in turn helps create a partner-to-client relationship.
3. Managed risk and finance
- Catastrophe insight and response by running D&A risk models on relevant data and creating proactive responses to emotional and stressful events.
- Underwriting Optimization with effective automation of the entire underwriting process to minimize errors and costs as well as reduce time.
- Financial Performance Management using D&A tools in pricing, underwriting, claims and claims adjustment expenses down through less-well-understood aspects such as agency productivity, marketing campaign ROI, operations effectiveness, reorganization, and dynamic, financially-aware decision making.
- Risk Management and Compliance utilizing D&A tools to make decisions influenced by insurers’ risk appetites in personal or commercial lines, life and pensions, annuities, and/or specialty lines.
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Digital Insurer's CommentsPersonalisation and real-time, on-demand delivery of products and services can only come through intensive data analysis. Same with operational efficiency, enhanced customer intimacy and new revenue models.
Many insurers are reluctant to invest heavily in D&A because they’re not sure what they’re looking for. But in the famous words of German philosopher Arther Schopenhauer, “The alchemists in their search for gold discovered many other things of greater value.”
Insurers investing heavily in D&A not only make targeted discoveries of known value, they also make ‘mistakes’ often leading to new insights. It’s the spirit of innovation.
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