Insurers have different ways of going about the use of data analytics. It is apparent, though, that the future of insurance hinges on how well
carriers use the data they have collected
for decades and match it with third-party
data to draw meaningful conclusions on
risks, policyholders, and even agents.
Miguel Edwards, director of technology, Allstate Ivantage Select and a
member of the Insurance Technology
Association advisory board, believes analytics is changing the way insurers think
about their business, particularly through
the prevention of risks. If carriers think
about coverage from a prevention aspect,
insurers can use data feeds from companies that digitize applications and cross
reference against their own database.
“Is this customer using a licensed
and bonded contractor?” asks Edwards.
“Is this guy doing the work himself and
needs a builders’ risk policy? One com-
pany entered into a partnership with an
alarm company. How is capturing alarm
events impacting their protection?
Those are all examples of openness. A
handful of large carriers, are capitalizing
Novarica conducted a survey in 2013
and asked insurers what they were doing
with analytics. Martina Conlon, a partner
with Novarica, reports that risk score
was one of the top areas carriers use to
identify the score around a property or a
driver in order to determine if it is going
to be a profitable risk for the insurer or
whether there will be significant claims.
Another area for analytics involves
claims, although Conlon expressed
surprise that insurers are not using it as
significantly there as they are in underwriting. Insurers are using claims fraud
scores and claims severity scores, but the
survey showed only about one-third of
insurers are doing that.
“There really are big benefits [in
claims scoring],” said Conlon. “Insurers
are operationalized in terms of the core
systems they use as well as enable rules
engines or third-party services in order
to execute the models. Risk scores and
claims related scores are the most commonly used.”
Analytics tools are getting better, according to Bryan Fowler, CIO of Oregon
Mutual Insurance, but he hasn’t found
them to be as intuitive as business users
“Some are more user friendly for
non-data scientists. Some aren’t insurer
centric, but it does put power in the user’s
hands,” he says
Fowler doesn’t believe insurers should
focus strictly on industry-specific tools.
“If you need industry-specific tools
you are trying to confine the uses of data
by defining industry values,” he says. “It’s
like big data vs. relational data bases. You
spend months getting data exactly how
you want it, but if you ask a question
The use of analytics to look into the hearts and
minds of policyholders has provided insurers a
tool that can change the way they observe their
customers and their own business.