I cannot speak from experience, but predominately an Insurance CEO has three primary objectives:

1. Grow the business
2. Reduce expenses
3. Ensure compliance.

Let’s individually consider each of these objectives in more detail.

 Grow the Business

• How does an insurance company grow from a $2bn to a $3bn organization? Essentially, insurance has a defined market size. Who needs a second home insurance policy or another life policy? Therefore to grow the business means increasing market share. To help achieve this objective, insurance companies are turning to analytics to improve pricing accuracy, create new products (telematics etc.) and enhance customer experience.

Reduce expenses

• An insurance company has many different expenses. There are operating expenses such as employee salaries and infrastructure costs, underwriting expenses, and commission payouts. But by far the biggest expense within a property and casualty (P&C) insurance company is claims. Claims payouts and loss-adjustment expenses can account for up to 80 percent of an insurance company’s revenue. Adding analytics to the claims life cycle can deliver a measurable ROI with cost savings and increased profits; just a 1 percent improvement in the claims ratio for a $1 billion insurer is worth more than $7 million on the bottom line.

Ensure compliance

• Insurance companies around the world are facing a host of new regulations. European insurers are consumed with implementing Solvency II, which will take effect in 2016. Many other countries are closely following events in Europe and seeking to implement the equivalent of Solvency II in their own regions. In the United States, the National Association of Insurance Commissioners (NAIC) has introduced the Solvency Modernization Initiative (SMI). To ensure compliance, insurance companies are implementing a comprehensive risk management frame work that includes data management, analytics and reporting.

In today’s highly competitive market, it is vital for insurance companies to minimize inefficiencies and reduce losses to protect profitability. By using analytics, insurance CEOs more easily achieve their objectives and sleep at night.

To learn more about how analytics can help, download the white papers “The Analytical P&C Insurer” and “The Analytical Life Insurer.”