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Survey Report

Use of analytics to expand across all core functions

Life Predictive Analytics Survey Report

Insurance Consulting and Technology
N/A

July 8, 2019

Life insurance companies will apply predictive analytics across all core functions to transform their businesses.

Life insurers expect to expand the use of analytics across all of their core functions (Figure 4).

Figure 4. Function-based plans for expansion of predictive analytics

Pricing/Rate setting
Now Two years
Group life 31% 56%
Institutional annuities 28% 64%
Individual life 18% 55%
Individual health 31% 56%
Retail individual annuities 7% 47%
Underwriting
Now Two years
Individual life 52% 92%
Group insurance (medical underwriting) 44% 63%
Individual health 27% 73%
Group insurance (case-level underwriting) 25% 56%
Mortality and morbidity
Now Two years
Institutional annuities 55% 91%
Retail individual annuities 40% 73%
Individual health 28% 64%
Individual life 23% 75%
Group life 19% 56%
Claim management
Now Two years
Group life 37% 87%
Individual health 28% 64%
Institutional annuities 10% 55%
Individual life 10% 40%
Retail individual annuities 7% 40%

Life insurers are committed to improving the customer experience and are very interested in how predictive analytics can lead to better claim management — particularly for group life policies."

Improved underwriting is a priority for individual life carriers — 92% plan to use predictive analytics within two years, up from a current 52%. This does raise the question of where this leaves the other 8% if the forecasts materialize. More generally, over half of all life insurers in all lines of life business anticipate using predictive analytics in underwriting by or shortly after 2020.

Pricing and rate setting are also poised for big growth in predictive analytics use with a small base to a majority showing in most lines of business. And although predictive analytics is currently more established in assessing mortality and morbidity risk, its use is expected to increase significantly.

Fast-tracking claim management

Life insurers are committed to improving the customer experience and, as Figure 4 shows, are very interested in how predictive analytics can lead to better claim management — particularly for group life policies.

Fraud detection and prevention are key targets, with 86% of participants (up from a current 38%) planning to use predictive analytics to assess fraud potential — predominantly from claimants but also in applications from customers, agents and brokers, and in potentially excessive bills from third-party treatment providers. A majority of these companies are also looking to apply predictive analytics within two years to identify complex claims and to evaluate claims for litigation potential.

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