Willis Towers Watson has reported that harnessing advanced analytics and emerging data sources is becoming an increasingly vital concern for leading U.S Property and Casualty (P&C) re/insurers.
In a recent survey, Willis questioned 51 U.S P&C re/insurers, finding that customer experience, claims management, telematics data for pricing, and customer selection and product design were among the top priorities for the application of data and advanced analytics.
Around 67% of respondents said harnessing data would allow them to establish a faster service, while 65% agreed it would facilitate easier access to information, and 61% felt it would support more personalised customer experiences.
Primary data sources that re/insurers intend to use for customer centricity include internal customer data, customer interactions and surveys, and auto telematics.
J.J. Ihrke, Senior Consultant for Insurance Consulting and Technology at Willis Towers Watson, said: “Advanced analytics and emerging data sources are the new frontiers for transforming insurers’ operations and customer experiences.
“Insurers want to replicate the rapid and personalized user experience other industries have implemented, such as retailers, online environments and apps, which have raised consumers’ expectations for faster, smoother, more customized service.”
Willis also reported that the potential applications of advanced analytics for claim management were significant, with almost three-quarters of respondents hoping to leverage data to evaluate claims for litigation potential over the next two years.
Additionally, the survey’s P&C re/insurers expected usage-based insurance (UBI) to develop beyond auto as the Internet of Things is used to personalise risk assessment for homeowners and commercial property.
Personal line insurers ranked UBI (70%), unstructured internal claim information (61%), and unstructured internal underwriting information and social media (52%) as the data sources they expect to rely on most, while commercial insurers favoured unstructured internal claim information (92%) and other unstructured customer information (54%).
Nevertheless, Willis observed that re/insurers hoping to develop better enhanced data and analytics capabilities still face significant challenges, with 83% of respondents reporting that the understanding of analytics outside of their modelling teams is moderate or very limited.
Notable challenges also included data warehouse constraints (51%), data accessibility (41%), and information services bottlenecks and lack of coordination (33%), according to the survey.
Ben Williams, Senior Consultant for Insurance Consulting and Technology at Willis Towers Watson, explained: “The benefits of advanced analytics are hard to attain if companies can’t access and use data at the right time, in the right place and deploy it to the right people, including the end customer, in a comprehensible way.
“Insurers still have work to do to improve the levels of understanding around advanced analytics outputs for those who use them within the business. They should focus their initial effort on sources of data. New or better experience data, predictors and customer response information will always trump new methods being thrown at the same data.”