Predictive Analytics on the Rise in Insurance Industry: Survey

According to a recent survey, the use of predictive analytics is on the rise in the insurance industry.

Insurance providers are increasingly interested in data or analytics solutions to help manage producers and improve their performance, according to a recent survey.

Trilogy Insurance & Financial Services partnered with Insurance Networking News to survey more than 100 insurance industry professionals on the current state of predictive analytics in the insurance sector. According to the research findings, insurance providers have made investments in analytics tools over the year but are just beginning to realize the significance of technology to help manage provider performance.

The top three benefits of insurance companies' current data and analytics solutions are customer segmentation, improving the competitive advantage of insurance carriers and retaining existing insurance customers.

The survey findings show that Insurers recognize the value of predictive analytics solutions to help producers improve their performance. Insurance producers are also known as agents or brokers. Insurers are highly interested in producer management solutions, and 57 percent of respondents without a current producer management solution are interested in acquiring one, according to the survey.

Moreover, an overwhelming majority of insurance companies—82 percent—said they believe that being "easy to do business with" is the most important priority in managing producers. However, far fewer insurance providers believe they are doing an effective job in this. And insurance companies realize the value of new products and technology to run their business, improve service performance and reduce costs, but at no point do insurers feel that they are fully effective in managing agents, brokers and distributors against the top priorities, the survey showed.

"Predictive analytics are essential to driving better producer performance, and insurance companies are beginning to recognize the value and benefits of applying technology to this critical area of their business," said Joe Kelley, president of Trilogy Insurance & Financial Services, in a statement. "Trilogy was pleased to partner with Insurance Networking News in conducting this research. It underscores the need for advanced analytics solutions such as Trilogy SmartChannel, which helps insurers improve the productivity and profitability of their distribution channel."

Trilogy’s SmartChannel analytics are powered by more than 1 billion industry data points spanning more than 10 years and dozens of carriers, the company said. This data benchmarks the performance of a carrier, compared with the industry norm and provides insight into how the carrier's distribution channels should be performing, down to the individual producer. SmartChannel not only monitors, classifies and benchmarks producer performance, but also provides action plans to help maximize each producer's productivity.

Of the 109 people surveyed, 53 percent were from property and casualty insurance carriers, 32 percent from life insurance carriers, 28 percent from medical insurance carriers and 15 percent from multi-line insurance carriers.

Vast opportunities exist for predictive analytics across the producer management spectrum, Trilogy officials said. While business-related analytics are currently being used by insurers for customer segmentation, competitive comparisons and customer retention, access to predictive analytics for producers is required to drive smarter distribution for insurers, the company said. The slow adoption of predictive analytics solutions for producer management is not surprising, but the newfound recognition of the value and benefits is soon to spark action across the industry.

Meanwhile, survey respondents not interested in a predictive analytics solution for their producers primarily cited budgetary reasons. Of those companies that do not currently have a predictive analytics solution for producers, more than half are interested in predictive analytics solutions that will help them identify high- and low-performing producers, provide industry-wide benchmarking and offer recommendations about how to improve producer performance. However, of those interested in producer-related analytics, 37 percent do not have enough insight on their producers and 32 percent struggle to acquire effective producers, according to the survey.