Insurance firms are introducing predictive analytics across their operational landscape to streamline the insurance processes and make the industry more transparent.
FREMONT, CA: Studies say that more than two-thirds of insurers credit predictive analytics with reducing issues and underwriting expenses, and 60 percent say the data has helped increase sales and profitability. The use cases and applications of predictive analytics in insurance processes are seemingly endless. Using the plethora of insurance data available, here are the ways in which predictive analytics will change insurance in the coming years.
• Customized Marketing
A robust marketing strategy in insurance is aimed at offering the right message to the right customer using the right channels. Predictive analytics can use the available data insights to segment the insureds into clusters. In contrast to the traditional marketing approaches, predictive analytics consider underlying patterns in data while not trying to fit into predefined categories. Thus, insurance policies, products, and other services can be targeted to a much more relevant customer base.
• Improved Underwriting
Insurance underwriting involves assessing the risk posed by each client and determining a price for the insurance policy, which is fair for both the insurer and the customer. Predictive analytics can offer useful insights that will help in assessing the risk class for each client. Predictive analytics leverages past insurance data of customers to estimate policy risks.
• Enhanced Claims Processing
Claims processing is vital in the insurance process, and this process must be dealt with utmost care. Predictive analytics enables the insurance firms to monitor for fraudulent claims by churning historical data involving frauds. Thus, insurers can stay safe in case they see similar fraudulent patterns.
Moving forward, more insurers will use predictive analytics to gain actionable insights into all aspects of their businesses. Doing so provides a competitive advantage that saves time, money, and resources while helping carriers plan for a future defined by change.