While the industry still has some way to go in terms of integrating analytics into everyday business, the potential for analytics in the context of market strategies is huge, said Daniel Knüsli, head of P&C Analytics at Swiss Re.
Speaking to The Insurer at the Swiss Re Pavilion in Monte Carlo, Knüsli said there are “multiple applications” for insurers using analytics in relation to the traditional value chain and the distribution model, listing areas such as penetration and segmentation behaviours.
“There is also a lot of potential in ‘next best options’ which leads to cross and up selling, client retention, reducing churn, lead generation and simplifying the customer journey process,” he said.
On the subject of improving risk selection on the underwriting side, Knüsli sees a lot of potential.
“Leveraging novel data for superior risk insights, understanding drivers of loss on a very granular basis, leveraging both internal data – structured and non-structured - as well as complimenting existing data sets with novel data sets to inform pricing,” he said, will all culminate to transform the way in which insurers use analytics.
However, the uptake is still not where it needs to be.
“Looking back a few years there was probably quite a bit of hype around analytics and big data which has led to everyone doing something, but probably not everyone is doing the right thing,” he said.
“I believe there is a still a bit of a way to go for the industry in terms of fully integrating analytics into everyday business and therefore fully harnessing the power of analytics and data going forward,” he added.
However, Knüsli recognises the challenges involved in integrating analytics and, while Swiss Re is using data and analytics to “differentiate their offering with clients”, he highlighted some challenges the market should consider.
The first challenge is around prioritisation. “Less is more, so truly focus and engage on a project that will have an impact on the business and one that is ideally measurable, so unlocking premium growth, reducing loss ratios or increase efficiency,” he told The Insurer.
Secondly, he talked about the need for the role of a translator. “We often see a group of analytical folks and a group of business folks and they speak different languages,” he said. “We see the need for someone to act as a translator, someone who speaks both [languages] and therefore acts as a bit of a bridge.”
While it is regular cited as a challenge, Knüsli reemphasised the challenge around data alone, saying there needs to be “a continuous focus on data as a strategic topic”.
“I think the industry has come across in recognising the value of the data and thinking of it also as an asset, but thinking more strategically around data will be key moving forward in terms of unlocking business opportunity, getting more superior insight on risk selection as well as pricing which is quite pivotal if you think about the fast changing risk environment we are in,” he said.
Finally, Knüsli spoke of the importance of culture and leadership to help mitigate some of the challenges around integrating analytics and data into day-to-day business.
While there are more companies looking at data than ever before, he said they fall short when it comes to acting on the derived insights.
“There needs to be more confidence to act on the insights that are being derived from the data,” he said. This, he said, was something that needed to come from the top.