Risks Are Out of Focus Without Predictive Analytics
Andre Nieuwendam | July 27, 2015
We are, by definition, creatures of habit. That being said, if you haven’t given predictive analytics a first look as it applies to your corporate strategy in the near future, it may be time for a second look. While many companies have yet to unravel the full value of what predictive analytics will bring, it is important to remember the hazy view in the crystal ball of analytics will become clearer as predictive analytics becomes a bi-directional interaction between the consumer and the business.
Eric Siegel, an expert in the area of predictive analytics, refers to the science in simple terms. Predictive analytics will put the power to determine if a single person will click, buy, lie or die in the hands of the analyst. Understanding consumer behavior and empowering companies through predictive analytics will enable them to gain valuable insights, which will drive operational efficiencies to a whole new level.
Commercial and personal auto carriers have a significant jump on the Property & Casualty market due to the interaction between telematics devices and a car’s onboard computer and diagnostic systems. These interactions have allowed auto carriers an unfettered view into the driving habits of every single insured and capture vast amounts of data from the car’s onboard computer and transmit them to the device.
As a result, drivers who drive responsibly will see significant discounts in premium while less responsible drivers will be penalized in the form of increased premium with decreases in coverage. But this data is barely scratching the surface of what we will see in the next five years and beyond.
As cars are being equipped with more “smart” technology and wireless broadband is becoming less of a luxury and more of a standard feature, cars will begin to collect meaningful information about a driver’s habits. These two way interactions will be recorded and run through complex algorithms to categorize certain aspects of a driver’s behavior. All this data will be available to the insurer and the cars manufacturer, all to the benefit or detriment of the driver or drivers. As an example, a parent may get notifications about a teenager’s whereabouts and how fast the teen is driving.
At the same time, homes are becoming increasingly intelligent. A large online retailer recently released its first interactive concierge for your home, a wireless and Bluetooth-enabled computer and sound system with a soothing female voice and an equally elegant name that interacts with the user through their web-enabled retail account.
The online retailer also created a line of “smart” home products that can interact with and be controlled by a central device at the command of your voice. These devices provide measureable analytics around a person’s home behavior, and as a person interacts with the controller, the controller learns more about their habits and provides the information to the retailer via the controller. They can now use these analytics to determine and ultimately predict every customer’s behavior as they interact with the many enabled devices in their house.
An example of this would be a family that has an alarm system, but never asks the controller to enable it. The controller will gather information about the human interaction through behavior it is able to monitor through these devices.
As more and smarter houses come online. Digital Trends, a technology blog, estimates the number of technology-enabled homes will total 70 percent of the projected U.S. homeowner’s market vs. Europe, where currently 2.7 million homes are fully smart-technology enabled.
Bi-directional interaction will provide instantaneous access to consumer behavior that can be used to influence a consumer’s buying choices, but will help carriers determine targeted rates, discounts, and premiums as well as offering ala carte do-it-yourself policies based on what the consumer needs instead of baked-in coverages.
While analytics will become increasingly more complex, cloud-based solutions and cheaper hardware are making predictive analytics a cost-effective method for accurately predicting consumer behavior and also analyzing trends in your book of business.
As data becomes increasingly larger and more invasive in our lives, companies need to be poised to start looking at cloud or infrastructure that will scale to meet the rising demands of the engines needed to run the analytics and crunch them into actionable reports and meaningful data that will ultimately decide underwriting, rating and product development.
In the next five years, bi-directional interactions with intelligent technology will increase 100-fold. It is clear that with the growth of technology, data will be more actionable than ever.
So if you are not thinking heavily about predictive analytics and data modeling as part of your immediate future, I only have one question. Do you feel lucky? Do you?
- Simplifying the Move to a Third-party Print Provider
- Take a Business-Driven Approach to Continuous Improvement for Core Systems and Processes
- Electronic Chat with Ron Glozman
- Guidewire’s Data Guru Mike Byam on How Insurers are Using Internal and Third-Party Data
- Electronic Chat with Russ Bostick
- Electronic Chat with Rock Schindler
- Electronic Chat with John Siegman
- Electronic Chat with Martin Burlingame
- Insurtech Landscape 2019: Top 5 Takeaways
- Grinnell Mutual Tackles Massive Transformation -- in Stride
- A Candid Conversation with Paul Mang
- SageSure Insurance Managers Improved Competitiveness by Consolidating Payments to a Single Digital Platform
- Digital Does Matter in Insurance-- And Insurers are Missing the Mark
- The 22nd-Century Insurer: Taking a Cloud-First IT Approach
- The September/October 2019 issue of ITA PRO magazine is now available in digital format here:
- ITA Pro Magazine May/June 2019
- Spotlight on the 2019 IASA Conference
- ValueMomentum Selects Erie as Site of Regional Development Center
- Capgemini and Majesco Become Alliance Partners
- Electronic Chat with Dr. Dan Shoham
- Electronic Chat with Todd Greenbaum
- Martha Notaras: The “Outsider” with an Amazing Inside View
- Electronic Chat with Larissa Tosch
- Martha Notaras Will Join ITA LIVE 2019 as a Keynote Speaker
- Five Things to Consider When Evaluating Your Cyber Risk
- ITA Pro Magazine, January/February 2019
- Synergy Between Insurers' IT and Analytics Teams Key to Operationalizing Insights, Says Novarica
- Major Ransomware Attack Could Hit U.S. with $89B In Economic Damages
- ITA Announces 1st of Three Keynote Speakers at ITA LIVE 2019
- Electronic Chat with Jeroen Morrenhof
- Legacy Systems Are Dead. Really? Don't Count On It.
- Now Accepting Nominations for the 2019 ITA Bridge Awards
- It's time to register for ITA LIVE!
- Registration is Now Open for ITA LIVE 2019!
- What to Expect from a Digital Experience Platform Implementation
- ITA Pro Magazine September Edition is Now Available
- It's National IT Professionals Day
- Save the Date for ITA-LIVE 2019
- OneShield Software and UrbanStat Work Together to Improve Real-Time Analytics and Risk Decision-Making
- ITA LIVE 2019 - SAVE THE DATE!
- Insurance Technology Association Announces New Editor-in-Chief
- August 2018 Edition ITA Pro Magazine is Now Available
- Enterprise Architecture in an Agile World
- Top 10 Tips for Securing Your Mobile Devices and Sensitive Client Data
- Industry Insight: 4 Global Insurance Trends in Digital, Data, Content Services and Security
- Diving Deeper into Prioritizing Your Strategic Digital investments
- Why Content Rules
- How Mass Personalization Will Open the Small Business Benefits Market
- At Year End 2017, Will Your Organization Be Protected from Cyber Risks?
- Do Insurance Bots Dream of Mitigating Risk?
- Conditioned to Respond
- Managing & Mobilizing Insurance Data in a Connected World
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Policygenius Releases Two New Tech Tools
- Trov and Sompo Partner to Expand Global Mobility Solutions
- Guidewire Software Announces First Quarter Fiscal Year 2020 Financial Results
- Patriot Life Insurance Company Upgrades its Life & Annuities Underwriting Capabilities with Sapiens
- SDRefinery Rebrands to Reflect Evolving Business Model and Announces New Appointments
- Zywave Acquires Data Analytics Provider miEdge
- Trov Launches White-Label Renters Insurance Application in Partnership with Lloyds Banking Group
- Bestow Announces Executive Hires
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA LIVE 2020
ITA LIVE 2020 –SAVE THE DATE!
April 5th – 7th, 2020
The Diplomat Resort
Become a member today to receive updates – www.itapro.org/MR
BLOGS AND COLUMNS
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE
Case study of how a Fortune 500 employee benefits provider serving 35 million insureds throughout the U.S. and Europe transitioned from in-house... READ MORE
- Vendor Views