Fact based decision making is the largest lever of analytics function to capture business value today. It is also the first step of evolution for the function to prove how it can add value to the business directly. To know more about Data Analytics being used in the insurance industry, Rashi Aditi Ghosh of Elets News Network (ENN), had a conversation with Amol Godha, Strategy & Data Analytics Head, Reliance Nippon Life Insurance.
The insurance industry is now a demand driven sector. What role is technology playing in ensuring this transformation?
● Insurance demand is driven in segments of products like protection, health etc. and still not overall across the product class. This in fact puts all the more ask on tech.
● Technology is leading the transformation in insurance through two key fronts digital and data
Digital because half a billion Indians subscribe to Internet. The industry looks forward to making space online by creating digital experiences for new as well as existing customers. While the focus is high on digital, it is still at a nascent stage. Technology teams have a large role to play in the near future in the sector. The reason I say it is at an early stage is because most of the digital experiences are in piecemeal for most players and not seamless, omni channel and across the lifecycle of the product. While customer servicing , part of acquisition has evolved through digital, we are still away from making a 100 per cent digital journey for a customer. This I think will be a major role of tech in the future.
On the data and analytics front, insurers are now realising the value of data they own. They are exploring the use cases to utilise this data for customer as well as business benefit. Today, leading players in the industry are using data across the lifecycle of the customer. For example, today’s data is extensively used to prioritise prospects and optimise selling. Even product suitability is now driven using analytics. Few more examples are segmenting current customers and creating discretionary efforts on renewals, servicing. Claims and proactive fraud detection are also common use cases in the industry now. Technology has evolved much faster on the data and analytics front for the sector. However, the journey of analytics playing a lead role instead of support to the business is still evolving and this is where tech will transform itself as well
How is Data Analytics used in the insurance industry? How significantly is it helping you understand the changing customer behaviour?
Traditionally, insurance has always used data but limited to Actuarial and UW teams. However, lately, the industry has started a journey on advanced analytics in a big way. Most of the leading players in India have already set up or are in the process of setting up centres of excellence for data analytics within the company. These COEs have seen success in pockets. The biggest shift we will witness is analytics playing a lead role for business than a support . Three big areas where players have adopted analytics are predictive science, fact-based decision making and lastly enhancing UW and actual use of data.
On the predictive front with AI and ML techniques improving, the predictive science has become more accurate, reliable and pragmatic. The use cases spread from better lead prioritisation to be able to create concentrated efforts on the right set of prospects is a substantial value creation for business. Also, on the revenue side, renewals, online targeted marking are big beneficiaries of advanced analytics. Analytics has also added new capabilities to risk assessment or UW, claims and fraud prevention efforts in the industry.
Fact based decision making is the largest lever of analytics function to capture business value today. It is also the first step of evolution for the function to prove how it can add value to the business directly. With dedicated COEs investing time in analysing data and trends, it has built capabilities to aid business decision- making by the line functions. Slowly by integrating analytics with the front line, strong influence is being built using data backed insights.
What are the major challenges pertaining to data management for the insurance sector? What is the way out?
Fractured data and legacy system – the legacy systems were not built with the vision of impactful data capture , storage and processing. This leads to multiple system and inconsistence data access. Lots of large players are now creating layers of feature mart where they are unifying multiple systems and creating meaningful and user-friendly data warehouses as part of their EDM strategy.
Limited augmentation possibilities – this is a specific to India problem related to external data availability and access. Historically, we have had very limited information available for individuals. However, systemic digital penetration in India with Aadhar, digital banking, demat Insurance, new tax reforms etc., the future looks much better in terms of external data availability and access.
How do you see the future of the insurance sector with data strategy in place?
The players leading in Data Analytics practices will hold an edge over others. The analytics will solve biggest business challenges, i.e.faster and cost-effective customer acquisition, lower servicing and retention costs, improve fraud controls, effective Uw and pricing models with newer techniques.
This will be possible due to shaping four key trends in the space – Explosion of data from connected devices, Open data ecosystem available for the use, Evolution of AI/ML techniques, digitisation of financial services ecosystem.