Do you like knowing how a story will end before all the events play out? Some stories are transparent and require little more than common sense to figure out the likely conclusion.
Analytics for insurers don't necessarily help underwriters reach a conclusion with sad or happy endings, but they do help insurers shape informed opinions about risk and whether carriers can be comfortable in accepting a risk in exchange for a fair premium.
I don't know if your carrier is incorporating analytics into various phases of its operation, but I also can't imagine why they wouldn't. I interviewed two people this week for different articles and independent of each other they spoke out with great enthusiasm for the future because of what they are seeing being done with analytics.
"Analytics is the future," said Greg Ricker, CIO and senior vice president for Atlantic Casualty Insurance.
The beauty of analytics, of course, is not just in the ability to analyze data on customers and risks, but in many cases to make valid predictions about possible outcomes. This will never be an exact science. As we learned over 20 years ago, time travel—thanks to a flux capacitor—is the only way to predict the future, and that was really just a form of cheating.
With any technology, though, getting it to work the way you want can take more time and energy than anticipated. Bill Jenkins, managing partner with the consulting firm Agile Insurance Analytics, was quoted in a recent article on this website:
"This keen interest in business intelligence/analytics now has carriers assessing their capabilities to manage, successfully deliver, and use these technologies. These assessments include the aspects of data quality, data management, data governance, needed skill sets, and proper numbers of staff along with aligning the data initiatives with the company strategy and needs (a data strategy aligned with the business strategy)."
One of the key points Jenkins makes involves the talent of the staff operating the analytics tools. The ability to anticipate possibilities and make educated guesses about what direction the risk will take is a throwback to the talents of the underwriters the industry has relied on for decades.
The quality of training—and finding the right people to be trained—will be the future of insurance underwriting. The tools that offer a sharper image of what is likely to happen are just a bonus.
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