By embedding and automating predictive analytics across the enterprise, insurance companies acquire the ability to better understand and predict their customers’ future behaviors by analyzing, modeling, and scoring demographic and transactional data.
The convergence of predictive analytics, business processes, and IT architecture signals a transformation in the way insurance companies serve their customers. It marks a fundamental shift in the way value is measured, from an emphasis on products and solutions to actual experiences.
TowerGroup, a leading research and advisory services firm focused exclusively on the global financial services industry, believes predictive analytics must play an integral role in the way insurance companies now do business. In a recent report on the insurance industry, TowerGroup revealed that "data management and predictive analytics are no longer merely ‘nice-to-have' technology initiatives. Carriers that fail to recognize this fact will see significant deterioration in their results, as well as plummeting loss of competitive position."
Predictive analytics empowers claim handlers, underwriters, insurance brokers, customer service representatives, and other key stakeholders across the enterprise with the predictive insight to create value from underutilized data from every channel to improve customer interactions.
With a new focus on data about people and added importance being placed on achieving customer intimacy, insurance firms put themselves on a track to becoming a predictive enterprise in which business objectives are interconnected.
With the ability to capture this vast supply of customer data – both structured and unstructured – insurance companies are able to truly know who their customers are and dynamically improve interactions from underwriting to claims so that they never lose sight of the customer's wants and needs.
Industry analyst firm Gartner, Inc., also recommends that insurers seriously assess their current IT investments. In her report entitled, "Hype Cycle for P&C Insurance, 2008," vice president and analyst Kimberly Harris-Ferrante said, "For success, property and casualty insurers must continue to invest in technologies to stay competitive and to differentiate themselves – especially in claims and customer service.
"Technologies such as claim management solutions, predictive modeling solutions, GIS, and wireless claim applications will help insurers to improve these tasks and, thus, reduce costs and improve customer service quality and retention. Quality claim processes that are efficient, rapid, and better managed, including real-time fraud identification and streamlined processes, will be a critical success factor by 2010."