ARLINGTON, VA, May 28, 2024 — According to a new survey result from WTW (Willis Towers Watson, NASDAQ: WTW), a leading global advisory, broking and solutions company, companies reveal slower than expected progress in their efforts to implement advanced analytics. Despite the scale of investment made by North American property and casualty (P&C) insurers, WTW’s 2024 P&C Insurance Advanced Analytics Survey highlights the challenges these companies face with data and analytics.
Insurers have long used analytics in pricing and underwriting, and only a few outliers remain today. However, traditional analytics is increasingly insufficient in these functions, with 49% of insurers saying they are incorporating AI into their analytics processes.
“Insurers want to use analytics across their business - the ambition is there, but it’s not translating into reality.”
Laura Doddington | Head of Personal Lines, Insurance Consulting and Technology (ICT), North America, WTW
However, while AI is used more in pricing and underwriting, insurers struggle to integrate analytics into other areas of their organizations. The aspiration is present, with many insurers stating that they intend to incorporate analytics into different areas, including claims, marketing, distribution, and others, within the next two years. Nevertheless, considering the actual use of analytics over the last few years, the results demonstrate that progress has been significantly slower than initially hoped for and, in some cases, non-existent.
When asked about the most significant impediment to increasing the use of analytics in their organizations, the most frequent survey response was IT bottlenecks. Despite the considerable investment in technology over the last few years, this trend has deteriorated instead of demonstrating improvement. In addition to technology challenges, translating analytics needs into business realities was frequently cited in the survey as a driver behind the slow progress.
Laura Doddington, Head of Personal Lines, Insurance Consulting and Technology (ICT), North America, WTW, stated: “Insurers want to use analytics across their business - the ambition is there, but it’s not translating into reality. If insurers are to transform their aspirations into more tangible capabilities, they must ensure that the right foundations are in place. This requires technology solutions that allow for more sophisticated use of analytics across the organization, ultimately driving better decisions and a faster, more streamlined speed to market. Technology needs to move from a bottleneck to an enabler. This requires a robust roadmap and a clear translation from business needs to analytics and technology requirements. And this preparation cannot take years – insurers can’t afford to get left behind. However, the good news is that agile, fit-for-purpose technology solutions exist and, when utilized appropriately, can quickly deliver real business value.”
Regarding the increasing trend towards the use of AI, Lauren Finnis, Head of Commercial Lines, Insurance Consulting and Technology (ICT), North America, WTW, stated, “The use of AI is going to transform the insurance industry, resulting in better outcomes for both insurers and consumers. Areas such as Generative AI offer enormous potential to revolutionize our industry, and investment in innovation is important. To maximize value from this investment, ensuring that the right foundations are in place is critical to allow insurers to capitalize on the benefits this new technology can deliver. This includes a focus on infrastructure, governance, data, and, above all, on solving real business and customer needs. In addition, while companies are eager to implement the newest technological solutions, it is important to note that most companies are still not even close to realizing the full benefit of more traditional AI approaches such as machine learning. There are immediate and real gains to be realized by applying these techniques throughout the organization.”
The insurance industry is moving faster than ever, and those who can effectively activate analytics across their organizations will be in the strongest positions to respond. With 86% of organizations surveyed saying they have seen a strong leadership commitment to analytics, there are good intentions from the top. The winners will be those who can execute at pace and scale.
WTW’s 2024 Advanced Analytics Survey asked P&C insurers in the United States and Canada for their insights on using advanced analytics in insurance. Read the complete report here.
About Insurance Consulting and Technology
WTW’s Insurance Consulting and Technology business serves the insurance industry with a powerful combination of advisory services and leading-edge technology. Our mission is to innovate and transform insurance, and we deliver solutions that help clients better select, finance, and manage risk and capital.
We work with clients of all sizes globally, including most of the world’s leading insurance groups. Over 1,000 client companies use our specialist insurance software on six continents. With over 1,700 colleagues in 35 markets, we continually strive to be a partner and employer of choice to the insurance industry.
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