During the past few years, as business intelligence and analytics have evolved to play a major role in all facets of the business world, certain industries have adopted these tools in a particularly significant fashion. The insurance sector is one of these, as the inherent advantages of BI and big data apply themselves naturally to the data-driven nature of industry tasks like underwriting and calculating risks and policyholders' premiums rates.
Within various segments of the insurance field, such as auto insurance underwriting, the adoption of analytics has been more prevalent than others. That said, the basic nature of its benefits would remain the same regardless of what type of insurance providers are offering. As such, firms in this sector that have not taken the time to implement these platforms should consider industry examples of how other businesses have succeeded with them.
Analytics bolster auto underwriting
In most of the auto insurance industry's history, the underwriting process has traditionally been manual, even with the advent of advanced technologies and software that could, in theory, have automated the process, according to PropertyCasualty360. However, the sensitive nature of underwriting led insurance providers to treat it on a case-by-case basis – until recently.
As analytics became more prevalent, personal auto insurance carriers began to adopt them to automate the underwriting process, making it a faster and more efficient endeavor. The source stated that some experts in the industry view it to be one of the best possible uses of big data.
Uses in other insurance underwriting processes
The news source reported that for other segments of the insurance industry, underwriting has not necessarily yet developed into an analytics-driven task. For commercial insurance carriers that concentrate heavily on complex liability issues, automating underwriting could be risky, and any mistakes could have large-scale consequences for a firm.
Nevertheless, BI software platforms are being used in commercial insurance to great effect by some. Workers' compensation carrier Chesapeake Employers' Insurance Company is one such firm – it has employed predictive analytics since 2008. Scott Orr, the company's senior vice president of marketing and technology, elaborated on the possibilities of the platform.
"The high-level objectives are to make underwriting and the process of analyzing risk more efficient, to increase the speed of processing and to create a better experience for our agents [when] working with underwriters," Orr told the source.
As data becomes more readily available in the insurance sector, carriers would benefit by aggregating it to help determine risk and assign premiums that both appeal to policyholders and benefit firms' bottom lines.