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10-May-2022 20:20:54 5 min read

Unlocking The Power of (Re)insurance Analytics

The right visualisation can turn an ocean of data into fast, actionable insights that inform better decisions – but it is vital everyone in the organisation shares the same truth.

Back in the day, the closest underwriters got to real-time data was the Lutine Bell that would ring at Lloyd’s whenever a ship sank. Today’s challenge is quite the opposite – there is now so much data at their disposal it is getting harder to extract valuable insights fast enough.

On any given day, data is fed to insurers from a variety of structured and unstructured sources including the internet, IoT devices, phone calls, satellites, third-party data feeds and public data sources – more data than any one person could feasibly process alone.

In this sea of information, it can be difficult to answer simple yet fundamental questions around real-time exposures or performance. That is where analytics come in, distilling all this into business-critical insights that can be easily visualised and understood.

A good analytics dashboard enables different teams, from underwriters to the finance department, to quickly identify the vital signs and key variables, figures and performance trends that are most relevant to them. This could include, for example, headline numbers like premium income, total exposure, number of risks insured or combined ratio; categorisations like class of business, location or risk size; or simply a breakdown of the biggest clients, losses, or risks. Certain variables, like profitability, are job role agnostic and should be easily accessible to anyone hoping to do a good job.

Analytics present information graphically, making it far easier to spot a pattern than by scouring a spreadsheet full of numbers (and easier to present digestible information to senior management). Crucially, it also enables anyone to quickly see any decision they are about to make in a wider context – be it the book of business, the loss history of a particular client, the organisation’s overall portfolio or even the external marketplace. Analytics do not replace market knowledge, but they do enhance and support it.

 

Single source of truth

The vast majority of (re)insurers are now reaping the benefits of analytics in various areas of their business. However, to maximise the benefits it is important they take a coherent, end-to-end approach to the underlying data rather than working in silos. There’s a degree of truth in the old joke that if you ask an underwriter, an actuary and an accountant how much premium they’ve written they'll never agree. If these teams are all expected to report on and analyse siloed data sets, decisions are still effectively being made in the dark.

This can negatively impact a company in three key ways:

 

1. Efficiency

If the data teams produce is not consistent and comparable, information has to be rekeyed, mistakes are made, and every time one team makes a change, everyone else’s analytics become less relevant and accurate. This is not only wasteful but also dangerous as the insights one team derives from its data may contradict those of another team.

 

2. Performance

Not truly knowing your position as an organisation when making decisions prevents you from growing in a sustainable and efficient manner. It stops you realising your potential and expanding your understanding and scope. It means you may often be assuming sub-optimal levels of risk. And it’s difficult to fulfil your strategic objectives if each team has a slightly different perspective on the truth.

 

3. Adaptability

In insurance, the goalposts are continually moving because the risk and data landscapes are always evolving. Empowering all employees to see the bigger picture when making decisions makes you nimble enough as a company to stay one step ahead. Analytics done right drives change. Change breeds continuous improvement.

 

Analytics done badly can send your business in the other direction. Yet too many (re)insurers still take a disjointed approach. This is unsustainable.

To truly capitalise on the power of analytics all teams must work from a single source of truth – a shared set of data and rules that are updated in real-time and applied throughout the entire insurance process. Meanwhile, the problem of extracting insights from an ever-expanding data universe is only going to get greater – meaning the competitive advantages of employing an end-to-end approach to data and analytics are only going to grow.

 

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