The one thing that doesn’t change about the insurance industry is that it continues to change—as new regulations are passed and technology advances, the insurance space is always in flux. With the constant changes, it’s important to keep an eye on what plays an increasingly important role, so you aren’t left behind. That’s why we’re taking an in-depth look at data and the vital role it plays—and continues to play—when it comes to the insurance industry.
To begin with, data itself can be a broad term. On a surface level, data is simply a collection of statistics and facts that can be used for reference or analysis. When you take that and apply it to insurance, you have a collection of facts and statistics from a broad range of sources, ranging from customers, public records, credit reports, and more.
Data goes hand in hand with predictive analytics, which is the process of using data to predict future outcomes. Most of the data a business uses is likely predictive analytics, and for good reason. According to research, predictive analytics reportedly helped reduce underwriting expenses for over two-thirds of participants, and 60% credited the insights from the data for increasing sales and profitability.1
At RMTS, we know the value data has on the insurance industry well—as one of the largest and most experienced managing general underwriters in the country, we’re always keeping an eye on how we can better help manage risk management solutions and secure long-term stability. To keep you informed, we’ve taken a look at some of the biggest areas in which data serves as a vital factor.
Identifying Trends
With the growing use of social media, smart devices, and customer interactions, data is now available directly from the source. Unlike data found through outside channels, this firsthand information is far more direct, and thus can provide more valuable insights, especially when it comes to pricing and risk selection.2
This can also come in handy when identifying potential markets. From behavioral patterns to common demographics and characteristics, data can reveal a good deal about potential markets, helping insurers to identify and target them.
Detecting Fraud
Risk is a common factor in insurance, and unfortunately, that includes the risk of fraud. According to the Coalition of Insurance Fraud, an estimated $80 billion is lost from fraudulent claims annually—and that’s just in the United States. Proper protection against fraud is both vital and sometimes difficult to do. Fortunately, the use of predictive analytics data can make it a little less difficult.
By helping carriers identify and prevent potential fraud before it happens, predictive analytics can drastically improve protection. The additional ability to retroactively pursue corrective measures is equally important. Turning to social media for signs of fraudulent behavior, insurers can use their gathered data to monitor online activity for red flags after a claim is settled.
Forecasting the Future
Plans aren’t made on a mere gut feeling—planning for the future requires an understanding of what that future may look like, and data’s contribution to this is hard to overstate. When it comes to predictive analytics, it’s in the very name: predicting where the market will move next from an informed standpoint. From using previous data to understand historical trends and apply them to the future, to looking to the future to decide where to go next, data plays a vitally significant role. Forecasting client behavior can influence what a business’ next move will be—and whether or not it will be successful.
Whether it’s aimed at cost reduction, fraud prevention, or supporting underwriting, data can be incredibly important in the insurance industry, and that importance only continues to grow. As new methodologies are explored and access to reliable data increases, RMTS is keeping on top of changes in the industry so we can provide you with the best. You don’t necessarily need predictive analytics to see the benefits RMTS’ solutions can provide, but we’ve got the data to support it if you do.
Don’t fall behind—reach out to us today!
1.https://www.wtwco.com/en-us/insights/2019/07/the-financial-rationale-for-predictive-analytics
2.https://www.duckcreek.com/blog/predictive-analytics-reshaping-insurance-industry/#:~:text=Predictive%20analytics%20in%20insurance%20can%20help%20insurers%20identify%20and%20target,to%20target%20their%20marketing%20efforts
