Technology leaders exhibit higher premium growth numbers and lower expense ratios

Data management and analytics are essential for carriers but only five to 10 per cent of carriers consistently capture value from their data and technology investment, according to a new briefing from management consulting firm, Bain & Company. “The big challenge is analyzing new forms of data and extracting useful insights,” they write in the recent note, Insurers Can Parlay Technology into a Competitive Advantage.

“Making deft use of data – from information collected by flood sensors at a manufacturing plant to a driver’s photographs of a crumpled car panel – has become a prime source of competitive advantage for insurance carriers. Zettabytes of data, much of it unstructured and behavioral, now flow from connected cars, houses, factories and human bodies,” they state. “Expanding amounts and formats of data exacerbate the challenge.” They continue, saying advanced analytics are not possible to orchestrate in a legacy technology stack.

Higher-frequency data 

“Monolithic, core systems cannot handle higher-frequency data that comes in different modes. Moreover, orchestration only works when data becomes an asset of the entire enterprise, not contained within the silo of a single department.” 

Attaining technology leadership, they say, can add three per cent to a company’s premium growth figures, reduce expense ratios five per cent and boost net promoter scores by eight per cent. “These technology leaders currently comprise a small group,” they write. “The great majority of insurers have not realized substantial value from their efforts to date.” 

To help, they suggest companies get clear about business priorities, lead with data rather than with applications, invest in the right tools and capabilities and orchestrate their initiatives. “The carrier’s starting position and ambition should guide specific technology investment and prioritization,” they state.

“Purposeful investment creates a virtuous circle of increased value, market share growth and the ability to invest further in tech innovations as they materialize,” they conclude. “Carriers that take a more scattershot approach, by contrast, likely will find their business ambitions undercut by investments spread thinly across competing priorities, mediocre value capture and lagging performance.”