Research

Advanced analytics and the future: Insurers boldly explore new frontiers

2017/2018 P&C Insurance Advanced Analytics Survey Report

May 8, 2018
| United States, Canada, Bermuda
In a short space of time, emerging data sources and advanced analytics have become new frontiers for transforming insurance company operations and customer experiences.


Many P&C insurers are already embarking on this voyage of discovery, hoping digital platforms and mobile apps will move them light-years ahead of their competition with faster, better information and more convenient service delivery.

Willis Towers Watson’s 2017/2018 P&C Insurance Advanced Analytics Survey Report examines how insurers are preparing for the future, including which new data sources they perceive as most useful (Figure 1), how they are adapting their current analytical techniques and where they are looking next to gain competitive advantage.

Figure 1. Top-growing new data sources insurers plan to use two years from now

Personal lines Now Two years
Smart home/Smart building data 0% 52%
Usage-based insurance information (telematics) 26% 70%
Social media 26% 52%
Unstructured internal claim information 39% 61%
Unstructured internal underwriting information 0% 52%
Images 13% 35%
Commercial lines Now Two years
Unstructured internal claim information 46% 92%
Other unstructured customer information 11% 54%
Unstructured internal underwriting information 25% 39%
Usage-based insurance information (telematics) 11% 47%
Web/Clickstream/Phone/Email customer interactions 11% 36%
Images 3% 39%

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Survey highlights

A focus on elevating the customer experience

Improving customer centricity is front of mind for insurers. Big leaps in how insurers plan to use customer data (from 49% to 76%), surveys (from 43% to 69%) and vehicle telematics (from 24% to 57%) are seen as the main facilitators of faster, smoother and more personalized customer experiences over the next two years.

Broader AI and machine learning applications

Few insurers have started to adopt AI and machine learning, with the biggest application to date an effort to better understand risk drivers (20%). Within two years though, many more insurers plan to use these techniques to reduce time spent on tasks by employees (49%), to identify high-risk cases (45%) and to build risk models for better decision making (45%).

Claim management transformation

Insurers see huge unexplored potential for advanced analytics in the claims area. Fraud prevention (82%) and triage to identify complex claims (80%), together with the evaluation of claims for both litigation and subrogation potential, are key applications for development over the next two years.

Telematics’ star is rising

Among both personal and commercial lines insurers, expectations for the wider use of telematics data are very high, with a focus, unsurprisingly, on pricing and underwriting. But that keen interest is also expanding into customer management, claims and loss control over the next five years. Beyond the auto market, 43% of respondents see a significant role for telematics in homeowners’ insurance within this time frame.

The benefits are clear

The dominant measure of success in the use of data and analytics is improved loss ratio (81%). Encouragingly, over a third of companies surveyed say that advanced analytics have already had a strong positive impact on the bottom line, with a further 54% citing a positive impact. Nearly three-quarters say advanced analytics also positively support top-line growth through stronger renewals, expansion of underwriting appetite and improved market share.

IT infrastructure upgrades

Small, midsize and large companies alike are actively exploring IT infrastructure options that will allow them to manage big data more effectively. Nearly half of small and midsize insurers are gearing up to use cloud-based services. A rising proportion of larger companies (from 19% to 48%) are also looking at cloud solutions and a significant number (37%) say they are also investigating Hadoop for distributed storage and processing of large data sets.

About the survey

Willis Towers Watson’s 2017/2018 Advanced Analytics Survey asked U.S. P&C insurance executives for their insights on the future of advanced analytics. Fifty-one P&C insurers participated in the web-based survey fielded in fourth quarter 2017: 33 multiline carriers, 14 commercial lines carriers and four personal lines carriers. Respondents included nine of the top 20 U.S. P&C insurers.

Willis Towers Watson Advanced Analytics Survey infographic showing 51 P&C insurers participated and annual direct written premium between $200 million to $3 billion