The insurance industry has always been regarded as a stable and profitable business. But with the transitioning of a new decade heralded by the rise of the COVID-19 pandemic, it has become clear that insurance companies have to innovate to remain profitable. 2022 was a challenging year for the insurance industry, with various economic shifts and global events, such as climate change affecting customer profiles.

With a plethora of data coming in from multiple channels, it has become more critical than ever to take a step back and ponder how insurance companies plan on processing, analyzing and integrating their data to create meaningful products tailored uniquely to customer profiles. An example of this is the aforementioned COVID-19 pandemic, which has accelerated these challenges by changing customer expectations within just two years. This has put pressure on insurers who now have an important question ahead of them: Is the industry ready to change its outlook on data processing?

The Traditional Nature Of Insurance

The global insurance industry is valued at six trillion U.S. dollars. That is a large number, equal to the nominal GDP of France and Canada taken together. But compared to the overall size of the global financial services market (valued at $28 trillion in 2022), it is a small fraction. However, this is set to increase by several folds this decade. Europe has an insurance penetration rate of < 10%. The country with the largest population, India, has about ~3.5%.

There is ample scope for growth in both life and general insurance. But the insurance sector has long been extremely traditional in its outlook and performance. A single catastrophe such as Hurricane Katrina can generate claims of $190 billion from home and business owners. A pandemic can cause death settlements to soar by 25%. Insurance companies have to invest profitably yet be able to liquidate assets worth tens of billions of dollars at short notice. There is little scope to experiment.

Also Read- Business Intelligence for Insurance: Leveraging Data for Strategic Insights

The Case For Adopting Business Intelligence Tools In Insurance

Business Intelligence (BI) comprises methodologies, processes, and technologies that convert raw data into meaningful information for business purposes. It has become an increasingly important tool for the banking and finance industries. In today’s competitive marketplace, every enterprise requires a competitive advantage. It has been shown that reducing risks, improving customer satisfaction, and streamlining business processes through the careful use of data science leads to top and bottom-line growth. This has been shown in the banking, IT, media, and retail industries. There is no doubt the same will happen with the insurance sector. Improved decision-making processes through Business Intelligence tools that crunch petabytes of data effortlessly will help the insurance industry.

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Top 3 Applications Of Business Intelligence In The Insurance Sector

Customer Acquisition

An IBM survey of 600 industry executives came up with startling results. 95% of insurance companies collect third-party and customer data, but only about 45% make use of real-time data. One size fits all policies, where one product developed with a set of actuarial inputs serves a cohort of customers, might not be enough. Every entity has a different risk profile that must be incorporated into the model. Till now, it has been difficult, but modern Business Intelligence tools have made it far more accessible. Bespoke policies can help penetrate untapped markets.

Risk Assessment

An insurer collects premiums and, in return, de-risks perils. The amount of premium depends on the risk assessed. Access to more data would lead to better risk assessment. There are two benefits –

  • The insurer knows more about the nature of risk and the possibility of occurrence.
  • A greater understanding of the risk leads to excluding those not at risk and lowering the premium.

Fraud Prevention

There is something that computer systems do a lot better than we do – pattern recognition. According to experts, 3-4% of claims are fraudulent. And the global loss can reach the figure of $80 billion. BI tools can monitor financial transactions in real-time and identify any suspicious activity. Machine learning algorithms can detect patterns in the data and flag potential fraud. An insurer can use the significant savings to not only improve profitability but also spend more on technology and induce a positive feedback loop.

FLIP – More Than an ETL Tool

ETL (the acronym for Extract, Transform, and Load) is a process behind data extraction from various sources, transforming it into a usable format, and loading it into a data warehouse. ETL has become critical for big data analytics, allowing insurers to quickly and accurately extract the data they need from disparate sources. The downside is that most ETL tools need coding to adapt their use for a particular business enterprise. This is where FLIP scores. Kanerika has designed FLIP as a Zero-Code tool. 

What Can FLIP Do? 

  • FLIP automates many of the manual processes involved in extracting and transforming data, reducing the time and effort required to collect and analyze data.
  • FLIP is made by business owners for business owners! Through an interactive Zero-Code dashboard, business owners can take data integration into their own hands and save numerous hours of coding and effort.
  • FLIP helps to eliminate data inconsistencies and errors and ensures that the data used in actuarial analytics is accurate and reliable. 
  • Ultimately, FLIP leads to cost-cutting and greater profitability not only through the automation of repetitive processes but also by improving competitiveness. 

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Conclusion

There is still much work to improve data flows within the insurance industry. As a business entirely dependent on data for its profitability, shifting to codeless and easy-to-use data integration tools is a no-brainer for insurance companies. With the release of FLIP, Kanerika aims to make that decision easier for companies to transition.

FLIP delivers the best Business Intelligence practices within the tool. Moreover, with cost-effective plans and easily the best user interface in the industry, FLIP is available now to give business owners control over their data.   Thank you for reading our post. If you would like to know more about FLIP, please visit FLIP’s page by clicking here, or write to us at contact@kanerika.com. Follow us on LinkedIn and Twitter for insightful industry news, business updates and all the latest data trends online.

 

FAQ

What are the top three applications of Business Intelligence in the insurance sector, and how do they impact insurers?

BI applications in insurance include customer acquisition, risk assessment, and fraud prevention. They help insurers personalize policies, better assess risks, and detect fraudulent activities, leading to enhanced competitiveness and profitability.

What are the potential long-term benefits for insurers who embrace Business Intelligence in terms of growth and profitability?

Embracing BI can lead to long-term benefits for insurers, including enhanced decision-making, reduced costs, improved customer experiences, and the ability to adapt to market changes for sustained growth.

How do Business Intelligence tools aid insurance companies in fraud prevention, and what is the global cost of insurance fraud?

BI tools monitor financial transactions in real time, using pattern recognition to identify suspicious activity. Insurance fraud costs an estimated $80 billion globally, and BI helps insurers detect and prevent fraudulent claims.

What benefits do insurers gain from using Business Intelligence for risk assessment, and how does it impact premium pricing?

BI enhances risk assessment by providing a deeper understanding of risks and their likelihood of occurrence. This leads to excluding those not at risk and potentially lowering premiums.

What is Business Intelligence (BI), and why is it relevant for the insurance sector in the context of innovation and growth?

BI involves methodologies, processes, and technologies that convert data into valuable insights. It is relevant for the insurance sector as it enables risk reduction, enhanced customer satisfaction, and streamlined processes, ultimately leading to growth.

How can the adoption of Business Intelligence tools benefit insurance companies, and what industries have already seen success through data science and BI?

BI tools can benefit insurers by reducing risks, improving customer satisfaction, and streamlining processes. Industries like banking, IT, media, and retail have already seen success through data science and BI.

What role does Business Intelligence play in fraud prevention in the insurance industry, and what is the global cost of insurance fraud?

BI tools monitor transactions in real-time, using pattern recognition to detect suspicious activity. Insurance fraud costs an estimated $80 billion globally, and BI helps insurers combat fraud.

How does the size of the global insurance industry compare to the overall financial services market, and what growth potential does the insurance sector hold?

The global insurance industry is valued at six trillion U.S. dollars, a fraction of the $28 trillion global financial services market. However, there is significant growth potential, especially in emerging markets like India.