This white paper brings together findings from the SMA study conducted in the first half of 2012 with insights for Canadian Life insurance companies and IBM’s own global experience with insurers, focusing on the shift that is underway from business intelligence to more sophisticated analytics. It highlights new initiatives in approaches such as predictive analytics and explores the expansion of analytics from the traditional risk-centric parts of the business to the customer, finance and operations areas.
Insurers that manage their information as a vital corporate asset and leverage it to gain new insights through analytics are in a position to fundamentally transform their businesses as well as maintain a competitive advantage. IBM is actively engaged in assisting L&A insurers with information-led transformations. We believe that using analytics in conjunction with integrated systems is the key to guiding decisions across the enterprise and providing optimum service to policyholders.
To achieve true transformation, insurers are extending their use of analytics to all areas of the business, including channel performance and optimization; customer analytics; new business/underwriting; and executive dashboards. The siloed, tactical or one-off approach is no longer a viable option. Business analytics and performance management must be nurtured as a core competency, supported by senior business sponsorship and business-driven projects.
It is an exciting time, with the insurance industry just scratching the surface in terms of the types of applications and business insights that will drive competitive differentiation.
Download the whitepaper for insights: Get Smarter: Data Analytics in the Canadian Life Insurance Industry (PDF).
Highlights
Several key findings emerged from the SMA research:
- The primary focus for sophisticated analytics in L&A has traditionally been in the actuarial area for risk-centric analysis (product design, pricing, reserving). However, analytics are now increasingly being used across the business for customer-centric, finance-centric, and operations-centric activities.
- Overall, L&A insurers are less experienced in using advanced analytics than their P&C counterparts. Canadian L&A insurers are on par with their U.S. counterparts in areas such as campaign analysis, channel performance and CRM analytics, but are behind in leveraging analytics in other areas.
- Currently, more IT spending is concentrated on traditional business intelligence and less on advanced/predictive analytics.
Download the whitepaper for more: Get Smarter: Data Analytics in the Canadian Life Insurance Industry (PDF).
Introduction
Insurers that manage their information as a vital corporate asset and leverage it to gain new insights through analytics are in a position to fundamentally transform their businesses as well as maintain a competitive advantage.
In the first half of 2012, Strategy Meets Action (SMA) conducted a research study to evaluate how life and annuity (L&A) insurers in Canada and the U.S. are leveraging data and analytics capabilities in their companies. Using surveys and interviews, the research study investigated business objectives, projects and priorities, spending plans, and challenges.
According to the research, L&A insurers understand the potential value of analytics, although they have often been slow to experiment, learn and adopt analytics outside of risk assessment and pricing by actuaries. However, nearly 70% of Canadian L&A insurers say they plan to increase overall spending on data and analytics over the next three years and many are already initiating new projects.
IBM’s focus on technological analytics capabilities has shifted to embedding analytics into the decision making processes for true decision management. Additionally, advanced analytics that even understands natural language and analyzes massive amounts of various types of data are being deployed by insurance companies as they search for additional competitive insight. The imaginary computers of Star Trek have been replaced by the very real IBM Watson computer, which recently beat world trivia champions on Jeopardy!. Accompanying this amazing advance of hardware and software is a hyper-abundance of data. We all use more devices than ever before, each generating more data than ever before. We can capture and manipulate data — both structured and unstructured — in ways that were never considered when the insurance business models that are still with us today were designed.
It’s not necessary for the insurance industry to wait any longer to capitalize on these advances. In fact, postponing the analytics journey is a position fraught with risk as insurance companies — large and small — have already embarked on their quest for consuming and applying analytics insight.
Various types of analytics, useful in many business applications, and big data are here and ready to be leveraged. Tools and accelerators now enable business users to actively capitalize on analytics. Analytics are being applied to business problems incrementally, and skilled partners are engaged to enable learning along the way. The most successful projects are the result of active collaboration between business and IT.
Best practices for analytics in Life & Annuity business have been established and innovators are expanding these concepts, applying analytics to daily decision making at the transactional level resulting in true decision management.
IBM is actively engaged in assisting L&A insurers with these information-led transformations. We believe that using analytics in conjunction with integrated systems is the key to guiding decisions across the enterprise and providing optimum service to policyholders.
To achieve true transformation, insurers are extending their use of analytics to all areas of the business including channel performance and optimization; customer analytics; new business/underwriting, and executive dashboards. The siloed, tactical or one-off approach is no longer a viable option. Business analytics and performance management must be nurtured as a core competency, supported by senior business sponsorship and business-driven projects.
It is an exciting time, with the insurance industry just scratching the surface in terms of the types of applications and business insights that will drive competitive differentiation.
Download the white paper
Get Smarter: Data Analytics in the Canadian Life Insurance Industry (PDF).
About IBM
IBM is one of the largest technology, services and consulting organizations. We help clients of all sizes and in all industries transform their operations through the use of technology, infusing intelligence into the systems that run our businesses, our society and the world. Visit www.ibm.ca.
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