The insurance industry is evolving dramatically to meet diverse challenges impacting every part of the insurance value chain:
Rising inflation is driving increased costs for claims. Meanwhile, external factors, such as climate change, supply chain disruption, rising inflation and interest rates, and overall economic uncertainty, are impacting the predictability and severity of claims.
Product diversification and disruptive distribution channels are changing how sales and underwriting teams distribute products in innovative ways.
Tighter consumer trust regulations, a greater need to know your customer (KYC) and environmental, social, and governance (ESG) issues are adding pressure on the risk and underwriting controls insurers use to guide decisions about who to do business with and how. This is especially true in the multi-line property and casualty (P&C), and specialty sectors.
Executive teams and boards are demanding more intelligent underwriting to increase the speed of risk assessment, and more accurate pricing to win business in the right sectors without undermining profitability.
Customer preferences and expectations have also changed. Speed of service, price levels, policy application and claim approvals, and ease of doing business are all becoming higher priorities, adding to fluctuating customer churn and further increasing the costs of customer acquisition.
Insurers need to deliver greater personalization, efficiency, and automation to products and services to increase customer value.
Meanwhile, the risk and fraud landscape for insurance continues to evolve at an accelerated pace, and the trends and dynamics outlined above are making that landscape even more complex. And organizations are facing new threats that they may not be prepared for. On top of it all, the digital revolution is changing everything.
But the silver lining is that where there are challenges, there are also opportunities. The time is now to rethink decision-making across the insurance value chain. Today’s most successful insurers are those moving fastest to innovate and embrace a new age of digital transformation. This will enable them to deliver new ways to more effectively connect data, more efficiently manage risk, and drive smarter and faster decisions to improve top and bottom-line results while also creating benefits for customers.
In this article, we’ll explore the obstacles to digital transformation and how to overcome them using Decision Intelligence to protect, optimize, and grow your organization.
Leaders see enormous potential in best-in-class data and analytics capabilities across the value chain, even for the highest-performing companies ... even the leading P&C insurers can see loss ratios improve three to five points, new business premiums increase 10 to 15 percent, and retention in profitable segments jump 5 to 10 percent.
McKinsey & Company
Creating value, finding focus: Global Insurance Report 2022
The biggest obstacles to digital transformation
Recent events such as the pandemic, in tandem with advancements in technologies and cloud solutions, have driven increases in the use of embedded insurance, omnichannel distribution, and product diversification. This has changed the customer and risk landscapes for insurers, requiring an intelligent use of data to remain ahead of the curve.
In response, many insurance firms are now aggressively pursuing digital transformation initiatives and reengineering their operations along every link in the value chain, from underwriting, sales, and distribution, to claims management and product design. But a range of industry-specific obstacles can hold insurers back from achieving digital transformation goals, including:
Complex legacy IT systems and the explosion of data sources and structures.
Disconnected decision-making across business units
Fragmented and siloed information controlled by individual lines of business
A steady stream of mergers and acquisitions (M&A) that have left data siloed
Ongoing and increasing cost pressures from inflation and claims leakage
All these factors contribute to the importance of the insurers’ inability to develop and maintain a holistic view of individual customers, and to gain insights from that contextual view to enable better decisions, improve customer experiences, and drive profitability.
Overcoming these obstacles with Decision Intelligence
Most insurers already have the data they need to make better decisions – but quantity does not equal insights. Data quality, accuracy, and trust issues are also barriers to digital transformation success.
To gain actionable intelligence, insurers need the ability to unify all their data, and not just from internal sources. They need to maximize the use and value of external sources as well. This unification needs to include data from any source and of any quality. It must create context for analyzing that data, and then use that information to drive better decision-making.
That’s what Decision Intelligence (DI) technology enables – and why more, and more innovative, insurers are embracing it.
You can use Decision Intelligence to:
Grow your business by improving sales and distribution, identifying opportunities to diversify and bundle services, and boost retention and renewal. Insurers using advanced analytics and AI have seen a 130% increase in sales, productivity, and lead conversion, according to research from Deloitte.
Optimize how your insurance firm operates, from underwriting and risk assessments to operational processing and automation to data management and analytics. In a recent Oxford Economics and Accenture survey, more than 60% of insurers surveyed said that technology is already having a significant impact on their claims and underwriting processes.
Protect your organization by reducing losses due to leakage, fraud, and financial crime by providing a means to monitor new and emerging threats more effectively. A leading insurance industry group estimates that fraud losses totaled US$308 billion in 2021 in the U.S. alone.
What is Decision Intelligence – and how does it benefit insurers?
Decision Intelligence, according to Gartner, improves decision-making by understanding and engineering how decisions are made, and how outcomes are evaluated, managed, and improved by feedback.
Decision Intelligence is the latest step in the evolution of business intelligence. Instead of merely combining all available data, and presenting it to the decision-maker, DI uses artificial intelligence (AI) to provide a single, unified analytic view – to either fully automate decisions, or to help data professionals and operational handlers make faster, more accurate decisions through augmentation.
With DI, and the right platform to enable it, insurers can connect and operationalize internal and external data to develop a richer and more comprehensive understanding of every applicant, customer, claimant, third-party, supplier, and risk across the insurance value chain.
To learn more about how to unify your data and improve mission-critical decision-making with DI, download our e-book, Why Decision Intelligence Should Be at the Heart of Your Organization.
How you can harness the power of Decision Intelligence in the insurance sector
When they can access the right data – with context – about every relevant party across the value chain, insurers can grow, optimize, and protect their business more effectively. Here’s a closer look at how.
GROW: Increase customer value and premium incomes
The expectations and demands of today’s consumers, small business owners, and corporate customers about buying insurance and making claims have changed. They want a simpler, faster, personalized, and more self-driven experience. They also want to compare prices from different insurers easily. In response, insurers are reengineering the application and claim processes to be more automated.
Customers’ high expectations about their experience make it more critical than ever for insurers to develop a deep understanding of their customers (individual and commercial). They need that insight to accurately assess their needs, sell to them more effectively, retain customers at higher rates, and increase premium growth.
And, given the continued focus on loss ratios, operational expenses, and providing better service, the pressure is definitely on insurance organizations to squeeze more value from their data to manage risk and offer more competitive products and services that, in turn, increase income and customer value.
Here are just two examples of how DI helps solve common issues for insurers so they can grow:
Insurers often lack the ability to see the connections between different members of a household or between a person’s personal insurance needs (auto, home, motorcycle, boat, RV) and that same person’s (or family’s) business/professional insurance needs. But with DI insights, they can take advantage of significant cross-sell opportunities and offer customers savings benefits through discounts on multiple policies. That helps to boost retention, too, as customers with multiple policies with one insurer are often less likely to change providers.
For select insurance types, insurers use risk assessment models to quickly determine whether, and at what premium level, to insure applicants. However, accurate decision-making requires high-quality data and the ability to confidently verify a person’s identity, prior history, associations, and other risk factors. The same is true for claims processing and adjudication. And this is exactly what Decision Intelligence enables.
increase in sales, productivity, and lead conversion seen by insurers using advanced analytics and AI — Deloitte
OPTIMIZE: Improve decision model accuracy and automation
Insurers are facing tremendous pressure to cut costs, particularly in operations and support functions. Factors driving this include new competitors, including born-digital startups, declining loss ratios, and more recently, inflationary pressure on claims payouts.
The response has been to accelerate the pace of digital transformation in the industry, which has helped insurers improve the speed and efficiency of many functions while reducing costs. This is true in both the application and underwriting process and in claims, where AI is being used to streamline the claims journey from first notice of loss (FNOL) to adjustment and settlement. Many insurers have also reported significant success in automating their claim adjudication and assessment processes.
It’s worth noting that optimizing with DI also helps to increase income and customer value to drive growth. Consider that many innovative “InsurTech” entrants have gained market share in recent years by simplifying the customer experience in auto insurance and pricing aggressively – promising “90 seconds to get insured, three minutes to get paid.” Firms with leading-edge capabilities in AI, big data, and digitalization across the value chain are those seeing the strongest growth rates. And investors have rewarded this innovation by increasing funding for InsurTechs at a rapid pace in recent years.
PROTECT: Implement robust risk and fraud controls
With more insurance sales and claims occurring online, the opportunities for fraud have expanded tremendously – and fraud is rising sharply. Fraud typologies are also constantly changing as bad actors adapt and innovate their tactics to evade monitoring and detection methods. As noted earlier, the U.S. saw $308 billion in fraud losses in 2021. That same resource – the Coalition Against Insurance Fraud – also reports that fraudulent claims account for roughly 10% of property casualty claims.
So, clearly, there are huge payoffs for insurers that can reduce fraud. However, fraud prevention requires having a complete, contextual view of customers and their networks of relationships. Many insurers look at activity, behaviors, companies, and individuals in isolation, preventing them from seeing the bigger picture essential for detecting fraud. Without a 360-degree view, they face limitations on what existing monitoring systems and investigation teams can achieve.
Many insurers are achieving significant success using new types of fraud prevention technology. One of the fastest-growing techniques is the use of predictive modeling. In a recent survey by the Coalition Against Insurance Fraud, 80% of U.S. insurers said they use predictive modeling, up from 55% four years prior. Access to high-quality, trusted data is critical to a strong fraud management program, the report states, as it powers technology.
The survey data also shows that internal data is the most relied-upon source (100%), followed by industry fraud watchlists (88%), unstructured data (81%), public records (79%), third-party data aggregators (55%), social media data (48%), and data from connected devices (15%).
Access the right data to make the right decisions
Now that it’s clearer where Decision Intelligence can provide value to insurers, let’s talk about the benefits of maximizing the value of your data.
When you bring Quantexa’s Decision Intelligence (DI) Platform into the insurance value chain, you can leverage AI to combine context with data science models to automate and augment decisions. For example, decisions can be referred to your operational teams – intuitively presented with the context to support anything from a quick decision to a detailed investigation.
With dynamic Entity Resolution, the foundation of Quantexa’s Decision Intelligence Platform, provides accurate answers not only to these fundamental questions, but also the context regarding those party’s behaviors, relationship, and connections at scale.
The results are:
Automated decisions that build on the knowledge of your best people
Augmented decisions that help your people spot critical connections they can’t easily see or may never know about otherwise
By investing in DI today, insurers can build trust in their data and establish a culture of confidence in automated or augmented decision-making to grow, protect, and optimize their businesses for the future.
One multi-line Tier 1 insurer has used Quantexa’s DI technology to improve new customer conversion rates by 50% by having better customer intelligence and insight. In fact, several Tier 1 insurers are using Quantexa’s DI Platform to:
Verify identities quickly
Offer customers multi-policy discounts by developing a more complete picture of each customer’s potential needs
See associations with other entities that enable better risk scoring and fraud detection
The platform to transform your decision-making
Integrate any source at scale to build a trusted data foundation
With multi-source data ingestion, you can rapidly onboard any source – internal, external, structured, or unstructured
Using Entity Resolution, you can bring siloed, disparate, and messy data together at scale for accurate single views.
Continuously improve data quality as part of the unification process.
Reveal relationships and insights, create stronger analytics
Reveal the relationships and context of how people, organizations, places and other entities interact with each other
Generate insights that build stronger, more meaningful analytical models
Using our open and easy-to-use tools and frameworks, your teams can make use of the full power of innovative Graph, AI, and machine learning methods
Decide and act
Augment and automate decision-making for actionable insights
Automate manual, high-volume operational decisions and maximize your investments in AI for efficiency and cost savings.
Transparent models mean each decision is explainable, with full visibility for security and regulatory requirements as well as model validation and optimization purposes
Empower teams to proactively explore insights and act - making faster, more confident, and more accurate decisions.
Why work with Quantexa?
The answer is simple: Quantexa delivers results. Insurers that have adopted Quantexa’s DI Platform have realized significant improvements in efficiency and cost savings including:
1%+ reduction in loss ratios through automated underwriting and claims decisioning
30x faster customer profiling and risk assessment across underwriting and claims
90% “accurate” automation of claims approved, including US$80 million of claims leakage avoidance
50% improvement in customer sales conversion and US$200 million in additional revenue generated
70% improvement in fraud impact and doubling of complex cases set up
80% reduction in KYC investigation time
“We have access to a wealth of data on the industry and on our global customers. But for this data to drive business insights, it must be homogenous, which is not always the case. Achieving this is an enormous task, which is why we are partnering with Quantexa. We want happier customers, and to ensure the claims we are paying out are accurate in the process.”
Chief Financial Officer, Allianz Technology
Get started with Decision Intelligence
Our vision at Quantexa is for all organizations to use Decision Intelligence to grow, optimize, and protect their business, and help bring innovation and confidence in decision-making to every industry in the world by driving the switch to contextual data. We believe in taking a partnership approach in every client engagement. Our clients tell us that we deliver on that promise.
Whatever challenges you face, whatever applications you have – our experts are here to help you adopt our technology within your environment. Our DI Platform is open, sustainable, and scalable as part of an industry ecosystem – and it evolves with the market. It also offers 99% matching accuracy for single views. And our platform is secure, with advanced permissioning and role-based data access.
How to realize rapid and ongoing value from your Quantexa investment
You can demonstrate immediate value by using the Quantexa Decision Intelligence Platform with every available dataset by:
Unlocking value, repeatedly: Pick another line of business and a use case – and continue building out the data foundation as part of your existing infrastructure.
Continually optimizing: With a unified data foundation and additional use cases, you’ll create a culture of continual optimization where confident decision-making becomes the norm.
Driving decision maturity: Continually increase your capabilities by deploying new technology advancements, along with learning and certification opportunities for your workforce.
Becoming resilient and agile: Your data foundation is immediately ready for any use case, giving your organization flexibility, resiliency, and agility to be ahead of the curve and address any threat or opportunity.
Quantexa can work with you to create a clear, step-by-step process to help you realize your objectives. If you’re interested in learning more about how Quantexa can partner with your insurance firm to meet your toughest challenges, talk with our experts.