Insurers are drawing upon a widening range of new data sources for everything from customer acquisition to underwriting and claims thanks to the proliferation of sensors, digitization of physical records, and the growing inventory available from external information brokers. Yet many still appear to be struggling to maximize the full value of data, despite advanced technologies and analytical tools being put in place to make sense of it all. Interviews with a dozen data and analytics executives at a wide variety of carriers (including two InsurTechs) as well as a survey of 50 additional data leaders from around the world revealed several significant challenges keeping insurers from fully capitalizing on their data to expand capabilities, spur innovation, and enhance growth (see figure 1 above). Deloitte's research found data often siloed by function, system and platform, and its utilization relegated to basic efficiency and cost control initiatives. As a result, many are stuck in the early stages of analytics maturity — still striving to make data more accessible, shareable and actionable. One fundamental finding stood out as a possible game-changer. Although the majority of survey respondents indicated they see data more as an asset than an expense, whether data is actually treated strategically among those interviewed in depth was often far more nuanced and aspirational. Many interviewees said that while they recognize data in theory is a strategic asset that should appreciate in value over time if nurtured with ongoing attention and funding, too often in practice data is actually still handled as a cost to be limited. For example, one insurer interviewed described data as "more of a commodity." Attitudes and approaches were very different among the two InsurTechs interviewed. While both cited the advantages of not being constrained by legacy systems or traditional operating models, they mostly emphasized the importance of putting data front and center as an asset that can be easily shared across the value chain. "As data grows and our ability to leverage it expands, that contributes to our success. And as it grows, even more data is generated," said one InsurTech executive interviewed. Such a phenomenon, which this InsurTech respondent referred to as the "data flywheel effect," can be set in motion if an accessible infrastructure is in place, allowing information to be leveraged faster and more effectively by a wider array of individuals across functions. Such a system should provide fodder for bigger picture proprietary insights and enhanced decision-making. Therefore, whether data is treated as an asset or expense likely has a big effect on an insurer's maturity level and capabilities in data management and analytics. As a result, few insurers surveyed consider themselves "pioneers" when it comes to data-related issues (see figure 2). However, while many insurers surveyed may not have yet reached intermediate levels of maturity overall, let alone the most advanced stage, there was a wide disparity within responding carriers by function. For example, many insurers surveyed rated their data and analytics maturity levels higher in core systems such as underwriting/pricing and claims than they did in customer segmentation, marketing, and distribution. While it's understandable that insurers would focus initially on upgrading capabilities in core systems, more attention should be paid soon to those other externally facing, revenue-generating areas going forward. Enhancing data/analytics maturity in such neglected functions could then significantly differentiate insurers from both a strategic (innovation) as well as tactical (cost and efficiency) perspective. In next month's article we'll explore the three maturity stages in more depth, as well as offer suggestions on how insurers might leverage data and analytics for greater innovation, differentiation, and performance. Click here to download Deloitte's full report, "How to walk the talk by treating insurer data as a strategic asset." You can also register here for Deloitte's webcast on Nov. 17, 2022 titled "Bolstering the value of data in insurance," and either listen to the live event for CPE credit, or replay it afterwards to hear from the authors firsthand. Former NU Property & Casualty Editor in Chief Sam J. Friedman ([email protected]) is insurance research leader at the Deloitte Center for Financial Services. These views are the authors' own. This piece is published with permission from Deloitte. See www.deloitte.com/about to learn more about Deloitte's global network of member firms. Read additional thought leadership by Sam J. Friedman: |

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