Insurers identify “game-changing” opportunities in analytics

Insurance companies are investing heavily in analytics and “big data” to seek competitive advantages and discover opportunities in pricing and fraud prevention, a new study has found.

The research survey, commissioned by ACORD and conducted by Strategy Meets Action (SMA), found that insurers in North America are spending close to $10 billion each year on data analytics.

“Insurers are investing in analytics,” according to SMA partner Mark Breading, “with the survey showing that North American insurers spend about 9% of their IT budgets on data and analytics. What is even more interesting is that business units outside of IT are spending approximately the same amount.”

The poll also reported that three-quarters of insurers plan to increase spending on analytics. A significant percentage of the survey participants identified specific “game-changing” opportunities, such as pricing and fraud, for applying big data approaches.

ACORD, a data standards development group, noted that standards and data integrity will play a key role in the future development of analytics.

“ACORD has been developing the ACORD Framework for over five years in response to our members and the insurance industry’s needs for more precise data management and data consistency,” said Shane McCullough, chief enterprise architect of ACORD.

“I believe the Framework models coupled with the existing data standards and standardized forms are crucial to the ever increasing needs of the industry for more detailed analytics and data quality.”