How insurers can leverage data to remain competitive
According to Capgemini, only one-quarter of insurers describe their risk selection and pricing as “fact-based and data-driven.”
A recent report form Capgemini Research Institute highlights the ways insurers are leveraging data in order to improve profits and stay competitive with InsurTech companies. According to Capgemini, 40% of insurers are using data to enter new markets, and 43% have upgraded and modernized their risk algorithms.
“It has become increasingly difficult for traditional insurers to compete with InsurTech companies,” Seth Rachlin, Global Insurance Industry Leader at Capgemini, said in a press release. “These organizations can only compete by embracing a data-driven approach to win market share, improve key ratios and generate superior risk intelligence.”
Insurers are leveraging this data by using it to develop new solutions, create value-added services for customers and enable new insights into risk and pricing. According to Capgemini, many are also utilizing modern risk algorithms to quickly visualize data from a wide variety of sources, and investing in other similar targeted technologies to enhance their business processes and improve customer experience.
“Only 18% of insurance organizations have both the technical capabilities, as well as culture and behaviors to support data-driven programs that derive full value from the growing volume of data,” Ramana Bhandaru, Global Financial Services Insights & Data Leader at Capgemini, noted in a press release. “These organizations are referred to as ‘Data Masters’ and they are considerably larger than their peers, with most averaging over $20 billion USD in revenue.”
The majority of these ‘Data Masters,’ they found, had three key things in common that push them ahead of the curve: They have a centralized governance or facilitation body, they collaborate with InsurTechs and they have created open application programming interfaces (APIs) to allow external parties to access their data.
To become data powered, Capgemini suggests insurers must invest in infrastructure to allow implementation of data-derived insight; establish an appropriate operating model to scale data-driven insurance use cases; foster a strong data culture across the organization; and orchestrate an open-data ecosystem.
You can full Capgemini Research Institute’s entire report here.