Commercial insurers can catch up with personal lines providers by exploiting the rapid explosion in the number and breadth of structured and unstructured data sources and use analytics to an improvement in loss ratios of up to 5%.
This is the view of analysts at the Swiss Re Institute, whose latest report "Advanced analytics: unlocking new frontiers in P&C insurance", suggests that technology advances will enable P/C insurers to explore new frontiers in risk assessment and mitigation.
Advanced analytics will undoubtedly make an impact along the insurance value chain, though true potential will only be realised through coordinated efforts between developers and users.
Challenges to success highlighted in the Swiss Re Institute report continue to be legacy systems, traditional mind sets and scarce talent at the intersection of data science, risk knowledge and technology. Despite this, it 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.
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