New research from re/insurance broker Willis Tower Watson (WTW) reveals that life insurers are seeking new solutions in order to build on their business performance whilst boosting customer relations in an already highly competitive market.
WTW surveyed 39 life insurers, including major multinationals, based in nine countries from across Europe.
It showed that over 80% of companies that already use predictive analytics report a positive business impact with none reporting negative outcomes.
In competitive markets, these techniques can provide insurers with a price advantage; in less competitive markets, they can lead to material cost savings, says the broker.
With the help of predictive analytics, historical and real-time data can also be mined to anticipate industry trends and customer needs, enabling insurers to exceed customer expectations.
The impact of predictive analytics on top and bottom-line performance has been greatest in relation to revenue generation, with 68% of insurers agreeing that it has helped increase sales and cross selling.
Four out of 10 companies reported that predictive analytics positively impacted and helped reduce issue/underwriting expenses and claims costs.
However, it did find that whilst some life insurers have improved in terms of their predictive analytics capabilities, most companies still have significant challenges to overcome, including a number of strategic capacity issues.
The data also showed that 30% of respondents believe that their analytics and/or actuarial teams lack the capacity to accomplish their predictive analytic goals.
Alastair Black, Director, Insurance Consulting and Technology, WTW, said: “Life insurers are on the cusp of real transformation, increasingly aware that by making predictive analytics a core corporate capability they can lay a strong foundation for profitable growth and high performance.
“Implementing these new approaches can be a complex process. Insurers will need to pick business use cases wisely and identify the most effective way to use data. Having the right talent and tools to process and analyse such vast amounts of data are just as essential if insurers are to harness its full potential.
