The vast majority of companies in the insurance industry are now using predictive analytics software, research by ISO has revealed.
The industry insights firm found that all large firms surveyed in its study were now using these insurance systems but added that more than two thirds of smaller firms (69%) have also embraced this solution.
The report said the reasons why insurance companies were deploying predictive analytics was primarily to drive profitability (85%), but it was also for reducing risk (55%), growing revenue (52%) and improving operational efficiency (39%). ISO said, however, that many insurance firms were struggling to make optimal use of the data available to them.
“The survey confirms that the industry has recognised the value of predictive analytics but still faces challenges in this area,” said Phil Hatfield, vice president of operations at ISO innovative analytics. “Data inefficiencies, scarcity of analytic talent, and the cost of that talent can hold companies back from completing as many initiatives as they would like. And smaller carriers often have significantly fewer resources to dedicate to modelling. However, there are innovative predictive modelling analytics tools available in our industry that all carriers can adopt to make better business decisions.”
The study also looked at big data technology and found that whereas more than half of large companies (51%) are currently using, or are at least evaluating, this technology less than a third of smaller firms (30%) are doing the same.