The use of progressively advanced analytics will enable property-casualty insurance firms to unlock tangible value, according to the Swizz Re Institute’s most recent sigma report, “Advanced analytics: unlocking new frontiers in P&C insurance”.
By utilizing advanced analytics that integrate data science, comprehensive risk knowledge and industry expertise, insurers can grow, optimize their portfolios and improve efficiency, the institute said.
“Challenges to success remain in the form of legacy systems, traditional mindsets and scarce talent at the intersection of data science, risk knowledge and technology,” Swiss Re institute said in a news release.
“Despite this, the Swiss Re Institute expects spending on data and analytics to rise within static IT budgets, as more insurers complete core systems updates over the coming years and seek out differentiating capabilities.”
Daniel Ryan, head of insurance risk research at Swiss Re Institute added, “The ability to gain useful predictive insights from ever-increasing amounts of data is challenging.
“There needs to be more investment of time and resources on data curation. Many new data sources are not created for insurance, and owners of the data may neither understand insurance nor what needs to be done to make the data usable for insurers.”
Nevertheless, insurance firms that utilize advanced analytics can expect at least a 2 to 5 percent improvement in loss rations under normal trading circumstances, the study found.