3 Insurance Aspects Benefitting from Predictive Analytics?

By Insurance CIO Outlook | Tuesday, July 14, 2020

Insurers are using predictive analytics to enhance their operations and come up with customized insurance policies.

FREMONT, CA: The insurance sector has witnessed a massive transformation over the past few years. Processes involving risks coverage to establishing monetary premiums have all experienced the wave of technology. Insurance firms today are realizing the potential of technologies and are using them to develop a sound predictive analytics capability. Conventionally, insurance firms relied on statistical methods with a fair share of instinct and guesswork to establish policies and premiums. However, present-day advancements offer an opportunity to the insurers to make firm, data-driven decisions. Here is how predictive analytics capability impacts insurance firms.

• Marketing Strategy

A sound marketing strategy is aimed at offering the right message to the right customer using the best channels. Predictive analytics can leverage the available data insights to achieve the above by segmenting customers into clusters. Against the conventional marketing approaches, predictive analytics consider patterns embedded in data while not trying to fit the records into predefined categories. Thus, insurance policies and products can be targeted to a much more relevant customer base.

• Underwriting Process Improvement

Underwriting involves assessing the risk posed by each client and establishing a price for the insurance policy, which is fair for the insurer and the customer. Predictive analytics can offer useful insights that will enable to assess the risk class for each client. For instance, predictive analytics utilizes past insurance data about a client’s heart condition, smoking habits, and other health-related vitals to estimate policy risks.

• Claims Processing

Claims processing is a critical insurance process that must be dealt with utmost care. While customers are entitled to claims in case their claims satisfy the policy terms, statistical data suggests that there is a fair share of false insurance claims as well. Predictive analytics enables the insurance firms to keep a check on fraudulent claims by churning out vast repositories of historical data involving frauds. Thus, insurers can stay aware in case they see similar fraudulent patterns.

Insurance firms are gradually introducing predictive analytics across their operational landscape. The capability will not only streamline the insurance processes but also make the industry transparent.

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