While P&C insurance executives and technical professionals remain optimistic that the prospect that advanced analytics can improve growth and bottom lines, progress on implementation has been slower than expected, according to a recent poll.
In addition, one particular area, analytics associated with telematics data, has become less attractive, based on responses to Willis Towers Watson’s 2021 P&C Insurance Advanced Analytics survey, compared to a similar survey conducted. in 2019.
As shown in the graph above, the survey showed that the use of telematics data by operators has decreased slightly since 2019. This may be due to the fact that the early and strongest adopters of telematics proposals “took away part of the brilliance and attractiveness of potential opportunities ”. for those who delayed, representatives for Willis Tower Watson speculated in a press release about the investigation report.
Likewise, companies may think that there are less complex advanced analysis goals and benefits to be pursued, the statement said.
Almost 70% of those polled cited the cost-benefit trade-off as the main obstacle to further exploration of telematics technology, the report says, also suggesting that another main concern of insurers with telematics is acceptance by telematics. customers. Concerns about cost versus benefit and customer acceptance outweigh concerns about implementation or technology issues, the report says.
However, the survey report notes that even though the use of telematics “has lost its luster with insurers in all sectors of activity” since the 2019 survey, more than 40% of auto insurers surveyed ( 42% in personal automobiles and 40% in commercial automobiles) said they plan to use telematics data within the next two years. According to Willis Towers Watson, the degree of commitment to telematics revealed in survey responses is strongly correlated with the size of the insurer.
While information on the planned and current use of telematics is one of the hallmarks of Willis Towers Watson’s 2021 P&C Advanced Insurance Analysis Survey, released in late November, the main objective is to assess appetite of insurers to use all types of advanced analytics to help them with various activities related to underwriting, claims handling, provisions, expense management, marketing and insurance management distribution.
“The pandemic has certainly increased the time pressures to do other things and delayed some investments in support of advanced analysis; however, it did not affect the plans much, ”said Nathalie Bégin, Director, North America P&C Practice, Insurance & Technology Consulting, Willis Towers Watson. The report highlights underwriting and pricing activity as the most popular current and planned uses for the analysis.
“Other reasons for some of the difficulties insurers face in keeping their ambitions on track can be found closer to home. These include the IT infrastructure, the dexterity with which they deal with data and the company’s cultural barriers, ”said Bégin.
While carriers’ progress in implementing advanced analytics has been uneven as a result, 20% of carriers who have used analytics for underwriting and pricing believe it has had a big impact on their revenue growth. business, compared to only 10% in the previous survey. Assessments of the impacts on net benefits were even stronger, with nearly half (46%) of 2021 survey respondents saying the analysis improved results, up from 37% in 2019.
When it comes to pricing, underwriting and claims, P&C insurers report that their usage and advanced analytics plans have increased since 2021. Pricing was by far the highest usage reported, with 83% of respondents saying analytics is used by their companies for scoring in 2021, up from 79% in 2019. But some of the biggest jumps in analytics use were reported for claims activity. Assessing the severity of future claims tops the list of claims activities for which insurers currently use analytics, with 41% of respondents saying their businesses use analytics for this purpose, up from 30% in 2019.
Further jumps were reported for assessing claims litigation potential (reaching 24% in 2021 vs. 14% in 2019) and automation (or direct handling of claims), selected by 20% of 2021 respondents vs. 7% of 2019 respondents.
Respondents to the 2021 survey included 90 P&C insurer representatives – 56 in technical roles and 34 senior executives – from 71 P&C insurers participating in the survey (62 multi-line carriers, three commercial line carriers, and six line-only carriers. personal).
This year’s Willis Towers Watson report also includes graphs related to insurers’ plans for using advanced analytics by line (loyalty and surety and excess damage are lines where most carriers do not plan to use). use analysis), intended uses in areas other than underwriting and claims (marketing got the greatest response from insurers surveyed), and insurers’ relationships with InsurTechs (56% have a working relationship with InsurTech community). Additionally, a section is dedicated to the value that carriers place on over a dozen different types of internal and external data sources for analytics initiatives, with a response percentage broken down by personal, business and specialty lines. .
A final section of the report titled “Reigniting Momentum” offers suggestions for getting analytics projects back on track, such as investing in data analytics expertise, InsurTech relationship harvesting, automation and leveraging on-demand capacity and API software to avoid IT. bottlenecks and capacity issues with bypass systems.
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