On-demand insurance policies, a flexible pension product, one-click insurance policy issuance for consumer items, and an innovative program launched in collaboration with start-ups – these are not the offerings of an InsurTech company but those of a three-decade-old European insurance major that until a year ago was struggling to adapt to today’s market demands.
Saddled with an aging IT infrastructure, the company was unable to cope with the expectations of today’s always-on customers. However, in just 12 months, it digitally transformed itself by building a new IT architecture to stream live data from multiple sources and deployed advanced analytics to glean insights for business decisions.
The company identified the need for a modern event-based data architecture that integrates historical and real-time data for business insights and greater responsiveness to evolving situations. The live data fabric connected core data systems with business applications and channels, and dramatically reduced the time to leverage data.
Powering Adaptability and Growth
Insurance companies are making strategic investments in data and analytics to meet consumer needs, and support innovation. A commissioned global analytics study conducted by Forrester Consulting on behalf of WNS, 2021 reports 96 percent of insurance companies to possess advanced or intermediate levels of maturity in data analytics.
Having analytics capabilities positions insurance companies well to navigate the choppy waters of today’s economy. These companies are better equipped to manage volatility, uncertainty and changes in consumer behavior. For instance, the pandemic has resulted in heightened awareness about personal and health risks, with the result that consumers are now seeking personalized insurance covers.
Our analytics study finds that data and analytics maturity correlates with business performance and resilience. The insurance industry, with its relatively higher maturity, has responded well to the pandemic-induced economic turbulence. In fact, 74 percent of insurance organizations have experienced growth in revenue over the past three years.
To retain that competitive edge, insurance companies must double down on their efforts to align analytics with business priorities. A McKinsey research shows that accelerating investments in digital and analytics will be the “difference between slowly declining and a flourishing” businesses in the insurance sector.
Analytics Use Cases Across the Value Chain
Winning in today’s dramatically changed marketplace demands a highly nuanced approach to data transformation. Digitally mature insurers are leveraging analytics in the following ways:
Making digital central in the business strategy: It benefits all stakeholders, including consumers, field agents, and the insurer. Artificial Intelligence (AI)-based algorithms aid prospecting activities by identifying high-value customers
Customer acquisition and personalization: This not only brings down the cost of acquiring new customers but also helps design personalized products by mining existing customer data
Integration of core functions: For functions such as document verification, payments, and digital signatures, savvy insurers are offering instant quotes and purchase via digital channels. AI-enabled engines allow friction-free underwriting and granular pricing with game-changing outcomes
Meaningful and deeper customer engagement: Seamless information flow among call center agents, chatbots and virtual phone assistants make human intervention personal and empathetic. It helps as consumers look for first-time resolution of their queries and a uniform experience across channels
Building and implementing a next-gen smart claims model: This improves the ability to predict and evolve guidelines based on intelligent historical data
Focus on the Core Competencies
Despite its comparatively higher maturity in data and analytics, the insurance industry is lacking in certain key areas, notably cloud-based analytical capabilities. Our analytics study shows that 33 percent of organizations are yet to incorporate cloud-based analytics into their strategies.
The study emphasizes that data and analytics maturity entails excelling at five key competencies – strategy, people, practices, data and platforms. More importantly, the first four competencies form the foundational components that enterprises must prioritize before they deploy platforms, tools and, applications.
Given the unpredictability of the marketplace insurance companies operate in, an accelerated data and analytics journey can help drive strategic decision-making at scale.