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Predictive analytics ‘to be essential for insurers’
Among the many sectors that are expected to benefit from the latest developments in analytics, the insurance industry is said to be able to see great results from the use of the technology.
This is according to research by Ovum, which stated predictive analytics will be highly valuable to firms operating in this sector. This is because companies need to be prepared for future market challenges such as the continuing spread of the digital economy and a more customer-centric commerce environment.
However, this does present opportunities for insurers to improve their position by effective use of data analytics, particularly through the use of information derived from non-traditional sources such as social media and the 'Internet of Things'.
This is a term that has been used to describe the growing trend towards embedding connectivity into a wide variety of objects, something that forward-thinking businesses will have to be prepared for in the next few years.
Massimiliano Claps, research director at International Data Corporation Europe, Middle East and Africa Government Insights, recently said: “The Internet of Things is reaching a tipping point that will make it a sustainable paradigm for practical applications that can change the future of individuals, enterprises and the public sector.”
For the insurance industry, Ovum stated enterprises should focus on initiatives that target key areas of their activities, such as business operations, marketing and customer relations.
As well as using customer experience analytics to improve the service on offer, insurers will be able to use effective predictive tools to determine which markets they need to be entering or leaving and estimate potential risks for the businesses as new customers are added.
Principal analyst for financial services technology at Ovum Barry Rabkin said companies in the sector are already aware of a range of impending threats and challenges they are set to see in the near future, such as tightening regulations, more demanding customers, an aging population and a weak economy.
Therefore, he stated: “The critical differentiator for insurers will be minimizing future risk through predictive analytics by tapping into the vast amounts of rich data.”