5 Ways You Can Transform Your Insurance Business with Data Analytics

| February 21, 2019

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Data forms the bedrock of the U.S. insurance industry, which accounts for almost 2.7% of the domestic gross domestic product, according to the Insurance Information Institute. Over the years, companies like yours have collected, stored and analyzed massive data sets to price different types of risks, and accordingly issue insurance policies. However, the unprecedented pace at which data is being generated in the digital era today–in terms of volume, variety and velocity–requires you to transform the way your organization looks at data analytics.

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DirectAsia Insurance

Welcome to the happier world of DirectAsia Insurance! We understand that we live a world where insurance is seen as a necessary chore, some find it mind boggling and some find it a hassle. DirectAsia wants to be the brand where honest and responsible people can receive a trusted, positive and joyful protection experience.

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Will your insurance IT investments pay off?

Article | April 12, 2021

Automated claims processing, price comparison platforms, mobile bill paying—these are just some of the digital services that insurance customers expect and insurers want to provide. As the demand for digital skyrockets, so does the need for insurers to invest in IT. In the past seven years, the share of IT in total operating costs of property-and-casualty (P&C) insurers increased 22 percent. The rise of digital means technology is no longer a cost center. Rather, it is an asset that, if managed well, can increase growth and profitability. But do these IT investments pay off? As the COVID-19 pandemic exacerbates already increasing cost pressures, insurers’ IT budgets are under scrutiny; they want to see the business impact of their IT investments. Insurers with targeted IT investments achieve better growth and performance Data from McKinsey’s Insurance 360° benchmarking survey provide strong evidence of the positive business impact of targeted IT investments. In fact, insurers that invest more in technology outpace competitors that don’t pursue targeted investments in business measures such as gross written premium (GWP) growth, return to shareholders, and expense and loss ratio (exhibit). As an example, in life insurance, companies that invested more in IT saw a greater reduction in expense ratios (by 2.0 percentage points) and higher returns on technical reserves2 (1.7 percentage points) when compared with insurers with lower IT investments. Insurers achieved these outcomes within three to five years of making their investments. For P&C insurers, those with high IT investments achieved approximately twice the top-line GWP growth of low IT investors. High IT investments also produced a greater reduction in combined ratios when compared with those with low IT investment. Four areas for targeted IT investment So what kinds of technology investments can help insurers achieve growth and improve productivity and performance? Investments in four areas are critical: Marketing and sales: Marketing technology solutions can increase sales and processing efficiency, improve the quality of core customer-facing processes such as policy inquiries and policy applications, and improve customers’ overall experiences. McKinsey’s Insurance 360° benchmarking data show that tech investments in this category can facilitate top-line growth for P&C insurers by up to 20–40 percent; for life insurers, that growth could be 10–25 percent over a three- to five-year period. Underwriting and pricing: Automated underwriting fraud detection can improve the likelihood that insurers correctly identify fraud and set accurate prices. A pricing tool kit that analyzes pricing across competitors and enables a flexible, more segmented market versus technical pricing further improves profit margins. Insurers that deploy these and other product, pricing, and underwriting technologies have seen improvements in their profit margins by 10–15 percent in P&C insurance and 3–5 percent in life insurance. Policy servicing: Workflow automation, artificial intelligence–based decision support, and user experience technologies in policy servicing and within IT can improve the customer self-service experience and automate back-office processes, thus reducing IT and operations expenses. And state-of-the-art self-servicing options will reduce processing times and even improve customer experience. An analysis of programs for large-scale insurance IT modernization finds that insurers that deploy these and other product, pricing, and underwriting technologies have seen improvements in their profit margins by 5–10 percent in P&C insurance and 10–15 percent in life insurance. Claims: P&C insurers can use automated case processing—machine-learning technology trained to process basic claims cases—to segment more complex cases and significantly improve claims accuracy. Combined with better partner integration and steering technologies embedded in a transformation of the claims operating model, such technologies can help P&C insurers improve profit margins by 25–40 percent, according to McKinsey analysis of large-scale IT modernization programs. To realize the full value of IT investments, insurers must strategically allocate their resources and view tech as an asset, not a tool.

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What is the Expense Ratio for an Insurance Company?

Article | April 12, 2021

Providing financial security to its consumers is the ultimate aim of an insurance company. However, sustaining its own capability to finance its customers becomes its priority. To measure the financial sustainability, insurance companies use various different methods and techniques. Among them, the Expense Ratio serves as the ideal measure providing clarity on the logistics. Signifying the efficiency of an insurance company and measuring its profitability, the expense ratio gives a clearer picture of the financial aspects of the company.

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Does Your Business Interruption Insurance Cover COVID-19-Related Losses? Are You Sure?

Article | April 12, 2021

The COVID-19 coronavirus emergency has everyone scared, and many are imagining the worst. For business owners and managers, there is a fear that what you, your employees, and your customers or clients have built will be lost – through no fault of your own. And we don’t know how long the financial impact of the pandemic will continue.

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Do Entrepreneurs Need Business Insurance?

Article | April 12, 2021

Being an entrepreneur is no piece of cake. You are going out on your own, venturing into a new industry and the future is unknown. Many factors will contribute to whether your new business will be a success or not. One of those factors is whether you purchase comprehensive business insurance from the get-go. Below, we will discuss what types of business insurance you should consider as an entrepreneur who is starting your own company.

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Spotlight

DirectAsia Insurance

Welcome to the happier world of DirectAsia Insurance! We understand that we live a world where insurance is seen as a necessary chore, some find it mind boggling and some find it a hassle. DirectAsia wants to be the brand where honest and responsible people can receive a trusted, positive and joyful protection experience.

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