Data and analytics tools are the number one priority for insurers

Data and analytics initiatives are the number one technology investment area for insurance companies, according to The Nolan Company.

The management consultancy said that about three quarters (72%) of respondents to its survey said they were expanding their usage of data warehousing and reporting tools.

The study revealed that replacing legacy policy management systems was the second most popular initiatives, with almost two thirds (65%) listing these projects as a priority. The report warned insurers, however, that successful projects in the policy management system area were becoming increasingly expensive and complex. It claimed that failure rates are ’alarmingly high’ -at around 25%, due to an underestimation of effort - due to inadequate requirements and poor project management.

Eugene Reagan, principal consultant at The Nolan Company said: “Many insurers now face difficult decisions in the technology arena. The potential benefits of new technology are undeniable. Insurers can improve their risk management effectiveness, distribution capability and customer experience while reducing infrastructure, operations and claims-related costs, including fraud.

“However, they can do all of this with chronic pressure on their combined ratios, capital and expense budgets that will remain under tremendous scrutiny. All of this underscores the necessity of thoughtful, thorough research and decisiveness regarding high-impact, near-term technology solutions.”