Companies must develop the drive to evolve and the passion to survive and thrive in the current business environment. Today's economy will not tolerate a static strategy. Only those companies that embrace improvement should survive.
I am not alone in this point of view. “Even though the economic recovery is slow and sporadic, property and casualty insurers are poised for growth this year if they take proactive steps to turn challenges into opportunities,” blogged Sam Friedman, Research Team Leader at Deloitte’s Center for Financial Services, earlier this year on PropertyCasualty360.com. “Unable to depend on investment income due to low interest rates and a volatile securities market, carriers have been paying closer attention to underwriting—often with the support of new and improved predictive analytics—and raising prices for coverage accordingly.”
While smaller firms may look to consultants for help in applying the secret sauce, also known as predictive analytics, larger enterprises can work harder at inspiring their people to take on more analytic sophistication across the spectrum of their portfolios. Mid-tier companies must continue to innovate and execute, or they could become targets of choice for acquisition-minded larger companies.
Marty Ellingsworth, president of ISO Innovative Analytics, and I noted even as far back as 2009 that by executing on the latest developments in modeling, data quality, customer metrics and portfolio management, P&C insurers can establish a measurable competitive edge. In an intricate insurance ecosystem, a carrier’s strategic growth can be enhanced as it works more collaboratively and efficiently internally to satisfy market demands. With good analytics, insurers are better able to address product distribution and deal with the challenges of incomplete underwriting and customer information. Predictive modeling helps carriers to adapt those links in the industry's overlapping value chain that are critical to service and operational relationships.
Like spaghetti and marinara, applying the secret sauce of predictive analytics to pricing is an obviously good match. But the application of the analytics sauce doesn’t stop there. As time goes on, analytics will likely transform the industry’s overlapping links into an ever more valuable value chain.
David Cummings, FCAS, CPCU, is senior vice president of Personal Lines and Analytics at ISO.