2021 P&C Insurance Advanced Analytics Survey Report (North America)
Continuing the theme of the last Willis Towers Watson survey of North American insurers’ intentions for, and progress with, advanced analytics in 2019, the 2021 edition shows there is little doubt that expanding and improving the use of advanced analytics in a number of facets of operations remains high on the agenda of many companies.
Virtually across the board, insurers who responded to the survey report that their use of and plans for advanced analytics have increased over the past two years.
Virtually across the board — but most obviously in pricing, underwriting and claims — insurers who responded to the survey report that their use of and plans for advanced analytics have increased over the past two years.
Significantly, double the percentage of respondents (20% versus 10%) say advanced analytics has had a strong positive impact on the top line compared with the 2019 survey. It’s the same story with bottom-line performance, with 46% in 2021 compared with 37% in 2019 citing a strong positive impact (Figure 1).
say advanced analytics has had a strong positive impact on the top line compared with the 2019 survey. It’s the same story with bottom-line performance, with 46% in 2021 compared with 37% in 2019 citing a strong positive impact.
Nonetheless, many insurers say they have struggled to juggle priorities and overcome obstacles that would enable them to make progress at a faster pace, as many had envisioned. Time is the biggest enemy, mentioned by half of the respondents, but data management, handling and warehousing are also key factors mentioned in slowing or delaying progress. Interestingly, while dealing with the effects of the COVID-19 pandemic has clearly played its part in limiting the time and resources available to work on advanced analytics projects since early 2020, it seems to have had only a marginal impact on advanced analytics plans. One indication of this is signs of more extensive engagement with InsurTech activities.
The motivation for doing more with advanced analytics seems firmly established. The challenge for insurers is to find the time and headspace to allow them to take greater advantage of advanced analytics, tapping, for example, into opportunities that technology continues to offer for wider process automation, data integration, and more in-depth analysis to support competitive positioning and customer engagement.
Advanced analytics is becoming firmly established as a key source of potential competitive advantage among North American property & casualty (P&C) insurers. Despite most companies facing issues around prioritization or resource constraints, there have been strong pockets of progress in the two years since our last survey.
These are the big-ticket competitive positioning items, so it’s no surprise that they command a lot of insurers’ attention. The results suggest that while companies recognize there is room to increase the use of advanced analytics in rating/pricing, bigger leaps are anticipated in the underwriting process, including the levels of automation and decision support employed. Similarly, uses of advanced analytics in claims have accelerated at a faster rate, partially because there are more gaps to fill in capabilities in our estimation (Figure 2).
rating/pricing (83%), underwriting/risk selection (57%), evaluation of future claim severity (41%) and claim triage (36%).
rating/pricing (83%), underwriting/risk selection (57%), evaluation of future claim severity (41%) and claim triage (36%).
Over half of respondents describe themselves as having active working relationships with the InsurTech community, and 10% are fully commercialized. The percentage saying they do nothing with InsurTechs has fallen from 22% in 2019 to 16% in 2021.
Whatever their intentions, many companies report that implementing advanced analytics is not smooth sailing. Prioritization of projects within the wider business is seen as an issue by over 60% of respondents. Other frequently mentioned obstacles are perceived complexities linked to IT, data, modeling and customer understanding.
Whatever their intentions, many companies report that implementing advanced analytics is not smooth sailing.
While the pandemic has certainly increased time pressures to do other things and delayed some investments in support of advanced analytics, it hasn’t affected plans to any great degree. Just under 40% say they didn’t anticipate any change to plans as a result of COVID-19. In addition, many have already adjusted models or performed new analytics to reflect pandemic experience, with others saying they are planning to do so.
The survey shows use of telematics data has stayed the same or slightly declined since 2019. This may be because companies that went in early and strongly on telematics usage and propositions have taken off some of the sheen and attractiveness of the potential opportunities in certain markets for companies that didn’t. Equally, companies may feel there are less complex advanced analytics targets and benefits for them to pursue.
Willis Towers Watson’s 2021 P&C Insurance Advanced Analytics Survey asked P&C insurers in the United States and Canada for their insights on the future of advanced analytics. Two distinct web-based surveys — one targeting technical roles, the other senior executives — were fielded in the first half of the year. A total of 90 representatives (56 technical and 34 executive) from 71 P&C insurers participated, comprising 62 multiline carriers, three commercial lines carriers and six exclusively personal lines carriers. Respondents include six of the top 10 P&C insurers in the U.S. and five of the top 10 in Canada.
Participants represent a good cross section by line of business and size of company.
Participants represent a good cross section by line of business and size of company.
Note: Percentages might not equal 100% due to rounding.
| Title | File Type | File Size |
|---|---|---|
| Advanced analytics: Insurers move forward despite obstacles and competing priorities | 5.7 MB |
