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Survey Report

Factors driving investment in predictive analytics: competition and customer centricity

Life Predictive Analytics Survey Report

Insurance Consulting and Technology

July 8, 2019

Companies report multiple drivers for why predictive analytics capabilities are increasingly seen as essential for life insurers.

Competition — ranked of high importance by 78% of respondents — is the biggest factor. This also translates into a perceived need to invest to protect earnings and profitability (Figure 2).

Figure 2. Relative importance of factors behind investment in predictive analytics

High importance Low importance No importance
Price tag icon Competitive pressures in product development and pricing 78% 18% 4%
two people icon shake hands Customer relationship management 67% 22% 11%
Arrow trending up Earnings and profitability pressures 64% 27% 9%
computer chip Technological innovation 60% 36% 4%
Gavel Regulatory pressures 4% 45% 51%

Technology has already transformed the wider notion of customer experience in a whole range of sectors, and life insurers clearly feel they need to up their game, with over two-thirds rating this as an area of high importance."

The other principal driver is fortifying the customer relationship. Technology has already transformed the wider notion of customer experience in a whole range of sectors, and life insurers clearly feel they need to up their game, with over two-thirds rating this as an area of high importance.

When asked what changes this will entail in the next two years, the leading responses involve offering faster service (84%), more personalized experiences (71%), faster and easier access to policy details and information (64%) and a more mobile-friendly way of interacting (58%).

Need for data

There is recognition that insurers will need to access and use more data to achieve all or most of these goals. Internal customer data will be most important, but so will the abundance of information now available from wider online activity (Figure 3).

Figure 3. Top data sources life insurers use now and plan to use in two years to improve customer centricity

Now Two years
Person with shopping cart icon Internal customer data 55% 82%
pencil with circles icon Customer interactions/surveys 55% 73%
finger click icon Clickstream data 18% 45%
social icon Social media 13% 35%
atom icon Web scraping 11% 29%
Now Five years
wearable technology icon Wearables 6% 38%

The use of data from wearables witnessed the biggest percentage point jump. Globally, more products are incentivizing healthier lifestyles, wellbeing and condition prevention, so it’s no great surprise that individual life insurers are among those most interested in wearables. In fact, in five years’ time their anticipated use is expected to increase from the current 5% of companies that use them to 42%. However, usage in the annuities markets is expected to remain relatively peripheral.

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