Effective Customer Insurance through Analytics

InsurancePredictive analytics have been used in actuarial services in the insurance industry for many years now. However, given the nature of the insurance business and the market, it is now used in various other functions in the insurance industry – to enhance customer experience and satisfaction, for sales and marketing, to improve operational efficiencies and to reduce costs. In business, predictive models exploit patterns found in historical and transactional data to identify risks and opportunities.

Insurers gather and store a tremendous amount of data. Information from a variety of sources, including applications for policies, premiums and claims contain vital intelligence that often goes untapped. Predictive analytics combine powerful, fully automated discovery and analysis technologies to enable insurers to prepare for the future by learning from the past.

In the insurance industry, predictive analytics can be used for multiple service areas. Maximizing market share and reaching sustainable profitability levels is about more than just selling policies. Predictive analytics provides insurers with a deeper understanding of their customers. Combine that with more accurate customer segmentation, and insurers are primed to develop and implement more targeted up-sell and cross-sell campaigns and boost customer lifetime value. Efforts can then focus on acquiring and retaining the most valuable customers to ensure continued growth as well as developing new products that are more in tune with their market needs.

Analytics can also be used effectively for risk assessment and fraud detection. To properly set premiums, insurance companies must be able to determine the potential risk each client brings. This requires a comprehensive assessment of customer demographics, property characteristics, and past claim activity to predict the likelihood and severity of future claims. Predictive analytics aid in fraud prevention by conducting advanced analyses of patterns and trends from past claim transactions to instantly identify anomalies in current claims. Suspicious activity is uncovered and stopped before fraud and abuse can impact the bottom line.

With predictive analytics, insurers can use historical data to make better forecasts about future activity. Armed with this forward-looking insight, they can appropriately set loss reserves, identify and leverage subrogation opportunities, and instantly uncover problematic claims. Insurers can also boost customer satisfaction and retention by routing certain types of claims to specific agents and adjusters based on skill sets and by fast-tracking the settlement of appropriate claims.

TCS used predictive analytics techniques to help a large insurance company improve their customer contact metrics for better efficiencies. The client was basing their targets on two key metrics – average speed of answer (ASA) and percentage of calls abandoned (PCA). However, there was no clear correlation established between these two metrics nor was there a clear indication of their strength, but the client wanted to analyze their manpower planning process based on these metrics. TCS used data profiling and analysis to improve data quality, and with the help of simple scatter plots, found a very high correlation between them. More importantly, the analysis helped the client set data-driven targets and optimize their processes. This led to more predictable insights into workload management at the call center and to optimizing the cost to run their operations even better for the future.

The trend analysis of the data elements and metrics provided an insight into how metrics behaved over time and across different business units with respect to specified target values and the correlation between the metrics using simple linear regression analysis techniques.

TCS has a dedicated Analytics Center of Excellence for insurance that brings together business process and technical expertise/assets to deliver leading edge analytics solutions to its customers. TCS has end-to-end analytics capabilities to address customers’ strategic, tactical and operational needs. It provides analytical solutions in the areas of customer analytics, fraud and subrogation mitigation, actuarial services, claims, social media, product marketing and underwriting, compliance, and finance for P&C as well as Life & Annuity carriers.

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