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P&C insurers’ aspirations of implementing advanced analytics into key areas of their business remain elusive

But pockets of progress still exist, according to Willis Towers Watson’s P&C Advanced Analytics Survey

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January 28, 2020

ARLINGTON, VA, January 28, 2020 — U.S. and Canadian property & casualty (P&C) insurers revealed they were either overly ambitious in their goals for implementing advanced analytics or had their long-term vision blurred by the realities of day-to-day business and market challenges. Their slower progression in using advanced analytics cuts across the key areas of their business — chiefly customer centricity, claim management and telematics — according to leading global advisory, broking and solutions company Willis Towers Watson’s (NASDAQ: WLTW) new P&C Insurance Advanced Analytics Survey Report, and prior report on this topic from two years ago.

Certainly, there is no lack of ambition when it comes to P&C insurers wanting to use data and advanced analytics for the betterment of their business. But by their own admission, most are falling short of those aspirations right now”

Lisa Sukow
Director, North America P&C practice, Insurance Consulting and Technology, Willis Towers Watson.

“Certainly, there is no lack of ambition when it comes to P&C insurers wanting to use data and advanced analytics for the betterment of their business,” said Lisa Sukow, director, North America P&C practice, Insurance Consulting and Technology, Willis Towers Watson. “But by their own admission, most are falling short of those aspirations right now. One way to recondition their resolve is to align strategy and analytics by identifying what’s core to achieving a competitive edge and steer efforts and resources accordingly. They should avoid getting carried away with analytics for analytics’ sake.”

Nearly half (45%) said the prime culprit inhibiting them from making more progress in using advanced analytics centers on problems with information bottlenecks where people and systems typically need to interact. They also cited handling infrastructure constraints (37%) and a lack of sufficient staff to analyze data (37%) — underscored by its notable 13 percentage point rise compared to two years ago — as other top obstacles preventing them from becoming more data-driven.

According to the survey, participants surely expected they would be further along than they are in using advanced analytics for enhancing ever-important customer centricity. For example, more than three-quarters (77%) expected to be using internal customer data as a source by now, but only 54% are. Similar gaps in expected versus actual use exist for social media (46% versus 26%) and clickstream (34% versus 14%).

“Many insurers collect customer data as part of an application or claim process, which can be of wider value when suitable analytics are run,” said Nathalie Begin, director, North America P&C practice, Insurance Consulting and Technology, Willis Towers Watson. “However, insurers are not maximizing their internal customer data utilization — they shouldn’t overlook what is readily available. They should also take it a step further and supplement internal data selectively with external data sets to improve results.”

Survey findings showed all lines of business behind schedule with their use of advanced analytics for claim management, with one notable exception: 53% of commercial lines insurers are utilizing unstructured internal claim information as a nontraditional data source, compared to 41% two years ago. The usage in claims varies by line of business, e.g., more than half (54%) of workers compensation writers said they used advanced analytics in claims, compared to 10% in commercial property. 

Insurers use of telematics data demonstrated relatively slow volume growth for both personal auto (28% to 30%) and homeowners (2% to 9%) over the last two years. In addition, a relatively high percentage of carriers said they have no plans to use telematics across these and other lines of business in the next five years.

Progress around the use of artificial intelligence and machine learning fell short of carriers’ expectations, though the percentage of respondents who use both to build risk models for decision making (26%) and reduce manual input (22%) doubled in the last two years. Over two-thirds (69%) characterized their current state of InsurTech integration as early stage, and more than one-fifth (22%) said they’re not doing anything in this area.

“There are levers insurers can pull to sharpen their focus around implementing advanced analytics, such as reviewing staff allocation to get the most from employees who can devote sufficient time and develop their skills in the process,” said Sukow. “Overall, insurers should plot a course for how to apply data and analytics but remain flexible to take advantage of market and technical developments as they arise. Think of the whole process of enhancing analytics capability as a journey, not a destination.”

About the survey

Willis Towers Watson’s 2019 Advanced Analytics Survey asked P&C insurance executives in the U.S. and Canada for their insights on the future of advanced analytics relative to where we are today. Ninety-nine P&C insurers participated in two web-based surveys conducted in the second quarter of 2019, from April to July 2019. There were 66 multiline carriers, 23 commercial and 10 personal line carriers. Respondents included eight of the top 20 U.S. P&C insurers and eight of the top 20 Canadian P&C insurers.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

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