There is no question analytics is a hot topic. It seems like everyone is talking about it. But analytics is not new to the insurance industry. It has been around for many years; in fact it could be argued that the first mortality tables were a form of analytics as the actuaries were using historical data to forecast the survival rates of their policyholders and insured. However compared to many other industries, insurance companies are seen as laggards when it comes to analytics. Why is this?
One reason is that until now, analytics has predominately been seen as a back-office function, used by silo departments, such as claims, actuarial and marketing. To become analytically efficient, insurance companies need to create a strategic culture where data and analytics is part of the corporate DNA.
A strategic analytic culture starts and ends with executive management commitment, as illustrated in the diagram. When executives are fully bought into the concept of an analytic culture, they set goals, priorities and expectations based on the use of analytics. They invest in technology, people and processes that will continue to foster this culture. Most importantly, they become highly sought after, both internally and externally, as their companies continue to outpace the competition.
The journey to a strategic analytic culture starts with a small step. The key to success is to have a small, well-defined victory and then sell it loudly across your organization. Great examples of analytical insurance companies are AIG, AEGON and CNA.
In insurance companies, many decisions hinge on finding the right balance between what's best for the customer and what's best for the organization. Data and analytics can shore up the relationship between customer experience and profits, ensuring that decisions remain in balance. An enterprise-wide commitment to data and analytics is the key to achieving this balance. To find out more download a copy of the white paper “Building a strategic analytics culture: a guide for the insurance industry”.