Most carriers leveraging data, analytics for pricing decisions
In addition to pricing, improving the customer experience is another way insurers are pulling value from data.
When it comes to creating value from data, insurance companies find that leveraging it to build actuarial pricing models brings the biggest returns, according to a survey by Equisoft and Celent, which revealed 91% of carriers use data and analytics to make pricing decisions.
Automating underwriting decisions, assessing customer satisfaction, gauging agent effectiveness and policyholder retention round out the top five areas carriers are finding value from the data they collect.
“The volume of data collected by insurers is increasing every second and deriving value from that data has become a hot topic and one that many carriers are grappling with,” Mark DePhillips, Equisoft senior vice president for the U.S., said in a release. “Our goal with this study is to provide insurers with practical insights on what their peers are doing with their data today, and help uncover what are the quick wins, how they can actually get value from their data right now.”
While pricing was by far the most popular area where data use is being prioritized, carriers are also looking to leverage it to enhance the customer journey further. Equisoft found equal support, with 73% agreeing that data use is being prioritized to inform the customer experience, improve call center/customer services and glean new insights into policyholders.
The survey also showed that as consumers continue to elevate their expectations around the digital experience, a gap is forming between digitally savvy insurance companies and those that are lagging. This is making it mission-critical that insurers become more focused on deriving value from data through digitization, connectivity, analytics and automation, according to Celent.
Marty Ellingsworth, senior analyst, data and advanced analytics, Americas at Celent, said in a release: “They have more data than ever, from extensive digital transformations and integrations with various data sources, and they understand that turning this data into more valuable assets is key to sustainable competitiveness where price, ease of doing business and peace of mind matter.”
When it comes to embracing an analytics-first approach, insurers reported that not having a data-driven culture is the biggest challenge they face. Additionally, integrating multiple systems and vendors and product-centric system silos were also cited as major hurdles.
However, few insurance executives surveyed said they felt a lack of knowledge, skills, abilities or computational horsepower were hindering their efforts.
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