Next steps for insurers: Distinguish the bright stars from the black holes

2017/2018 P&C Insurance Advanced Analytics Survey Results Summary Canada

August 2, 2018
| Canada, United States, Bermuda

The different regulatory and business cultural environments between the U.S. and Canada, such as attitudes toward price optimization, have already encouraged many Canadian insurers to venture more quickly into expanding data and analytics than a lot of companies across the border. But as technologies, regulation and markets continue to move on, Canadian insurers (and a growing number of U.S. carriers too) seem poised to seize further opportunities to use big data and advanced analytics to better quantify risk, streamline processes and improve customer experiences, or more likely a combination of all three.

Our experience suggests that the companies that will best harness the potential of this wider analytics universe for competitive advantage will recognize and follow three guiding principles.

Data are the primary source of value in analytics. New analytical methods, including AI and machine learning, are justifiably getting a lot of attention in quantitative circles right now, but we believe insurers should focus the most significant initial effort on their sources of data. Why? Because new (or better) experience data, predictors and customer response information will always trump new methods being thrown at the same data.
More data, in-depth analysis and new insights aren’t the end game. They have to translate into something the business can understand, implement and monitor, from which it can derive and offer value. Otherwise, the work done is simply a technical modeling exercise.
Stay on top of the technology. Legacy company systems and networks will make it increasingly difficult to conduct business effectively in the advanced analytics age. New technologies that enhance analytical capability and system connectivity, including those coming out of the InsurTech movement, will have a greater role to play.