Insurers recognize the value that data and analytics offer but often are challenged when quantifying or realizing that benefit. Additionally, data & analytics initiatives are expensive propositions and have a long duration. Even with strong executive sponsorship, these efforts can lose their champions as the initial excitement over the effort diminishes over time.
Novarica’s Three Levers of Value offer a framework for insurer data and analytics leaders to set expectations and measure the business value of their initiatives.
- Sell More. This includes introducing newer and better products to the market faster, as well as offering better services.
- Manage Risk Better. Novarica is seeing growth in the use of third-party data, predictive scoring, and analytics in underwriting and claims to improve pricing and risk selection.
- Cost Less to Operate. Data strategies can help by enabling automation, providing access to insights, and empowering business units to make informed decisions.
It is imperative that carriers identify their high value use cases up front, and estimate their magnitude, in order to maintain the support of their management team and to prioritize their efforts so significant benefits can be realized early in the process. Insurers should not fall into the trap of excluding a benefit because it’s an educated guess. Carriers that embark on a data and analytics journey without taking a value-based use case approach are at risk of not generating the positive profit impact that they expect.
Novarica’s most recent Insurer IT Budgets and Projects study found that business intelligence or data & analytics functionality are the top capabilities that insurer business executives need IT to deliver in 2019 and beyond. Given the many ways that data and analytics can improve profitability and performance, sponsors of these initiatives should have no problem projecting a positive return on investment. By laying the groundwork up front, a carrier can fulfill a data strategy that delivers visible impact.
For more on these topics, check out our Data and Analytics in Insurance: Building the Business Case report, or contact me at [email protected] to learn more about our research and advisory work with workers’ comp carriers.
Add new comment