MAY 20208Analytics is a key ingredient to insurance innovationBy Tom Warden, SVP, Chief Data and Analytics Officer, EMPLOYERSTom WardenI was asked to write on how analytics has transformed the insurance industry. But the more I thought about the premise, the more it seemed backwards to me. You see, insurance IS analytics. It is better if we view the needs of insurance as the engine that drives the evolution in analytics. The first serious use of analytics in it dates to 1693 when Edmund Halley created the first statistical mortality tables. Spoiler alert: he didn't use machine learning in the cloud to do it.Why is this important? Because I believe we tend to get caught up in the heat of the moment when advances in technology and data grow at a fervent rate. We are certainly in one of those moments right now...and it's mostly good. I increasingly hear and read about examples of data and analytics creating value for insurance companies and their customers. What cannot be so good at times like this, based on my experience of having lived through similar eras, is that the analytics "tail" starts to wag the insurance "dog". When this happens, enthusiasm becomes pervasive, investment in analytics expands rapidly, C-suite interest and expectations rise beyond attainable levels and the cycle collapses...but hopefully only for a short time.I started my insurance career in 1987. Mainframes and magnetic tape ruled the day. Oh, yeah...and IT departments controlled access to both. Data, the DNA of analytics, was pretty much locked up in policy and claims admin systems. I worked at an insurance research center and there was no lack of ideas for new applications of analytics there. But the computers and data were not widely available to execute them. Fortunately, the PC revolution and the advent of the minicomputer were soon at hand. The analytically inclined no longer had to fight for computer time, all we needed was data. Data began to flow, both from company data centers and external providers and we were off to the races.IN MY OPINION
< Page 7 | Page 9 >