No one likes to think of their company as being behind the technology curve, but those insurers operating without benefit of an advanced analytics system are doing exactly that.
Scott Diekmann has a simple explanation for why his company, Premier Prizm, is currently in the process of installing an analytics system it licensed from Innovation Group.
Frank Petersmark, CIO advocate for X by 2, believes the software providers that offer predictive modeling and predictive analytics have products that are maturing.
Trasancos believes every time he recalibrates a pricing model he learns something new.
What initially led Premier Prizm to look at analytics tools was the detailed work involved in a report Premier Prizm presents annually to its clients that involves what Diekmann calls “a significant amount of our IT resources internally to program different, specific queries to get the data.”
Diekmann reports Premier Prizm sought a solution that reduced the time and involvement of the company’s IT department and put the power with the business users.
“It will be specific toward what our users need to know,” he says. “It will be the same application with our data within it. I would be comfortable with [business users] using the system] with a basic manual [for instruction].”
The company plans to migrate all of its reporting needs to the software over the course of the next year.
“That’s kind of an intuitive use of predictive analytics,” says Pauli of fraud detection. “Most claims executives would say they need it for fraud because it is hard to find fraud hidden among all the claims data bytes. Now the carriers are looking for other purposes for its use in claims with an understanding that it can help in areas such as subrogation, litigation management, and vendor management. It definitely is a work in progress.”
For effective claims management, analytics can make that area a profit center if insurers are able to improve the life cycle of the claims, according to Ray Dowling, vice president, sales, for Innovation Group.
That’s another example of how technology is pacing at this point in time, according to Pauli.
“A lot of the pure data players are now getting predictive analytics capabilities,” she says. “Most technology providers understand that analytics—particularly predictive analytics—is where the industry is going and where it needs to be so there definitely is maturity. TowerGroup sees data-driven decisioning as a strategic initiative. We are seeing the leading carriers treating it that way.”
“Last year, low interest rates and challenges of the soft market performance were big issues because combined ratios were high,” she says. “In the spring, we started getting hit by catastrophes and all of a sudden claims became a top priority. On a dime, priorities can change because of events that are going on and the dynamics in the marketplace. Having a solution that has an insurance specific data model and the capability of handling policy and claims gives you the ability to quickly get new reports out and respond to the marketplace.”
If carriers are not careful about what they want to accomplish, Petersmark feels the whole purpose of an analytics project can be defeated.