By Stuart Rose, Global Insurance Marketing Director, SAS
Cary, N.C. (Oct. 8, 2013) – The phrase “every challenge provides an opportunity” has never been truer than it is today for the life insurance industry. While the industry is suffering a number of challenges due to continuing low interest rates, volatile equity markets, an uncertain regulatory environment, and the commoditization of products, insurers are feeling increased pressure on profitability. The industry is also experiencing unprecedented opportunities. While the US and Europe have faced an extended period of declining premium revenue, developing markets in Asia and Latin America are generating considerable growth. In addition, cutbacks in government-funded pension schemes are resulting in many customers turning to annuity products to build wealth for retirement.
Life insurance companies have been slow to adopt predictive analytics. But to overcome these challenges and help with the opportunities, life insurance executive are beginning to recognize the need to implement analytics as a way to innovate, differentiate and improve their organizations.
Data and statistics have always played an important role for life insurance companies, going back to the development of mortality tables in the 1600’s. Today, based on research by advisory firm Strategy Meets Action (SMA), the average Life and Annuity insurer invests approximately 8.5% of their IT budget on data and analytics. While this percentage has increased significantly in recent years, it is still lower than that spent on data and analytics by the P&C insurance industry.
Over the next few editions of the Analytic Insurer I will address how insurers are using data and analytics for such things as:
- Life underwriting;
- Customer insight and experience;
- Marketing and multi-channel distribution;
- Big data and social media.
In the meantime, to find out more on why analytics represents the next frontier for life insurers read the white paper “Analytical Life Insurer: Profitable analytical strategies for life and annuity carriers.”
About the Author
Stuart Rose is global insurance marketing director at Cary, N.C.-based SAS. Rose, a 25-year veteran of the insurance industry, began his career as an actuary. He has worked for a global insurance carrier in both its life and property divisions and has worked for several software vendors, where he was responsible for marketing, product management, and application development.
Stuart is a regular contributor to insurance publications and the Analytic Insurer blog, as well as co-author of the book Executive Guide to Solvency II. He frequently speaks at insurance conferences.
SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions, SAS helps customers at more than 60,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world The Power to Know®.