Accenture research has found that robust analytical capabilities are essential to high performance. To learn more, download Transforming Distribution and Marketing with Predictive Analytics (pdf).
- Top-performing companies are five times more likely than lower-performing companies to identify analytical capabilities as a key element of their strategy.
- Companies that invest heavily in advanced analytical capabilities outperform the S&P 500, on average, by 64 percent.
Descriptive and predictive analytics
I should clarify what I mean by analytical capabilities. Descriptive analytics, as their name implies, describe what happened, how often, and what actions are required. Predictive analytics take this to the next step, providing insight as to why something happened and predicting what will happen next. Both types of analytics are critical to success.
Predictive analytics for insurance distribution
Predictive analytics offer tremendous potential for insurers to understand a situation, determine the impact on their business and create an appropriate response. In particular, there are three areas where predictive analytics can help:
- Understanding customers. Customer segmentation enables insurers to develop different strategies for different types of customers, and also to understand which customers are most profitable.
- Targeting the right markets. Armed with an understanding of customers and customer segments, insurers can optimize their market share, customer mix and territory development plans.
- Hiring and deploying the right agents. Insurers can use analytics to determine specific agent characteristics that drive revenue growth, as well as understand the conditions, markets and territories that are best matched for an agent.
The use of analytics in insurance is nothing new. Insurers have long been using predictive analytics for pricing, mortality and reserving for risk, but have not extended its utility for insurance distribution. However, this powerful capability can enable high performance, drive customer growth and provide a competitive advantage.
David Shatto is the managing director of Accenture’s life insurance practice for North America.