Use of analytics to expand across all core functions

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

Underwriting

Mortality and morbidity

Claim management

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.