Understanding the Role of Analytics in Insurance Industry
The insurance industry is all about assessing risk and managing the same successfully. Life insurance industry operates intrinsically by balancing risk assessment and risk management. Compiled with a large volume of data the insurance industry operates with, arriving at meaningful information can be a challenging task. Also, the insurance industry is growing competitive with each passing year and numbers of insurance service providers are constantly on the rise. In such a scenario only those companies that can increase their top and bottom growth line can stay competitive and profitable in the long run.
Understanding Insurance Analytics
Insurance companies use a large chunk of data available with them and develop new tools to understand and analyze the data for their profitability. This process of using large chunks of data to understand the market dynamic and risk assessment is known as insurance analytics. Insurance analytics can go a long way in helping insurance companies develop their business model and various insurance products which allow the companies to stay profitable while attracting new clients and retaining existing ones.
Insurance Analytics and Business Blueprint:
For New Entrants: Analytics can help insurance companies who plan to enter new market segments. For example, with FDI in the Indian insurance sector now increased to 49%, more and more insurance companies are likely to enter the Indian markets. Before entering a new market, they need to offer products that have been developed for the local population, making them attractive for Indians as a whole. The same should apply to North America, EU, Asia, etc...
For Staying Profitable: On the other hand, the companies also have to take note that they remain profitable and do not end up losing money while offering protective services to the clients. Insurance analytics data helps companies to balance such a dilemma allowing them to grow and sustain business in the long run.
Three Significant Pillars of Insurance Analytics:
The three most important aspects of a well defined insurance analytics data is to acquire new customers, retain the existing ones and analyzing risk management to stay profitable in the long term.
Since market uncertainty and the rising costs mean that finding profitable customers remains a challenge for the industry overall, balancing both new customer acquisitions while retaining the older ones is an important element of success.
Credit: This is a re-blog of an article by the same name with permission from Aureus Analytics