2-Minute Q&A #4: How are Data & Analytics Reshaping the Insurance Industry?

Denise Garth: Welcome back to ‘Two-Minute Q&A Chat ‘exploring distribution management, where we ask the tough questions on how to get the most out of your transformation.  In our previous discussions, we introduced the DM Maturity curve and discussed how carriers can define their current location on the curve.  Today we are joined by Scott Busse, who leads PwC’s Data and Analytics practice, and Sundeep Thakkar, a Partner in PwC’s Cloud and Digital platform. We are excited to take a deeper dive on how Data & Analytics are re-shaping the insurance industry!

Q: To start off, what do you both see as the challenges to insurers from the three perspectives of Operating Models, Talent, and Technology? What is holding them back from using data to address these challenges?

Sundeep Thakkar – We’re excited to take a deeper dive into how data and analytics are playing a role in the industry.The fundamental problem with operating models is having a clearly defined relationship between the Information Technology partners and the Business partners. On top of that, as many insurers move to the cloud, they are struggling to generate a return on investment while moving decades of data to the cloud.

Scott Busse – This problem is interesting, because it used to be that there wasn’t enough data available, and now we have almost the opposite problem. You now need to organize your data in a usable way and apply analytics in a way that actually drives decision-making. Everybody, not just in insurance, is trying to get better at this and there’s just not enough talent to go around. Even if technology makes this a little easier than it used to be, organizations still need people who understand the business to effectively use the information they’re presented.

Q: I’m seeing companies bring in talent from outside the industry who have leveraged data & analytics at a far greater level. Do you think this outside-the-box perspective is another aspect of this fundamental problem?

Scott Busse- I do, and I think it’s getting a little bit better. There’s so much innovative analytic work going on in the insurance industry that I think that some of that talent, whether it’s an experienced hire from another industry or a campus hire out of school, are starting to recognize that the insurance industry is ripe for analytic talent and there’s tons of different ways to apply that knowledge across the value chain.

Q: Many insurers are trying to move from their data repositories or warehouses to the cloud where you have access to more data and tools. What are the challenges and opportunities you’re seeing from the insurers you’re working with in making that move?

Sundeep Thakkar- That’s probably the biggest question we’re dealing with for our client base right now. As insurers are making the decision to move to cloud, there are too many choices of platforms. The platform coupled with the talent they have makes it difficult to pick the optimal path forward. On top of that, they have to consider all the legacy investments they have across all assets when considering migrating to a new path forward. The underlying organization structures have not kept up with the decision to begin a journey to cloud.

Q: We often hear about data & analytics as it pertains to underwriting, but increasingly Distribution channels have a need for data optimization. What are you both seeing on that front?

Scott Busse- On the data side, third-party data is helping us understand customers on a personal level, in terms of demographics and behaviors. We can make decisions at a more granular level, and producers are able to interact with customers in a more meaningful way. As far as distribution channels, carriers are starting to really understand their producers and agency performance. They can tell if agencies are performing well because they’re good at what they do, as opposed to if they’re lucky, they’re in the right market, et cetera. This is allowing insurers to better guide investments to higher performing agencies.

Sundeep Thakkar- The proliferation of IoT, sensors, and telematics means every carrier is now ingesting a lot more information. From an infrastructure perspective, insurers increasingly need to move to the cloud to be able to keep up with all this information so they can make informed decisions. From a distribution perspective, harnessing data and analytics will allow them to answer difficult strategic questions relating to the channels they operate in. The only way to answer these questions is to engage in data in a meaningful way.

Denise Garth: If you enjoyed our quick 2-minute chat with Scott and Sundeep, check out our podcast for additional questions and answers. We will continue to bring the responses to your tough questions on all topics Distribution Management related, so be sure to check back here every month to catch each blog in our series!