Insurity, a leading provider of cloud-based software for insurance carriers, brokers, and MGAs, recently released its 2021 Analytics Outlook Report, which is the company’s eighth annual report. Employing industry and proprietary research, the report identifies evolving property and casualty (P&C) underwriting and data analytics trends, including how the COVID-19 pandemic is shifting strategies and propelling investments in data analytics by 83% — despite market volatility and lower investment yields.
The report includes major factors impacting commercial lines, such as how the COVID-19 pandemic will impact workers’ compensation insurers, catastrophe risk trends, data governance, and why a heightened focus on underwriting excellence is necessary for insurers to safeguard loss ratios and establish competitive differentiation in a post-COVID market.
“The benchmark of what makes ‘good underwriting’ is evolving rapidly,” said Kirstin Marr, Head of Data Solutions at Insurity. “It’s no longer enough that insurers have solutions to manage their internal data, explore third-party data, and utilize advanced analytics. To build competitive advantage, they must seamlessly incorporate analytics at every point in the decision-making process. We can expect to see more insurers shift their mindset to becoming analytics-driven throughout the policy lifecycle.”
Key findings from the report and Insurity’s 2020 Underwriting Survey include:
- 83% of insurers are planning to invest more heavily in data and analytics in 2021
- 73% of respondents indicated the pandemic has moderately or greatly accelerated their digital strategies
- 59% of respondents cited predictive scoring, pricing, and risk selection tools as a priority for their data and analytics investments.
- Other high-priority investments include real-time underwriting performance monitoring and management (39%), and third-party data (36%)
- 72% of respondents said they have “moderate,” “significant,” or “high” concern about their underwriters’ adoption of predictive analytics, a sentiment consistent with Insurity’s 2020 Outlook Report
- 53% of respondents who underwrite workers’ compensation stated that they anticipate returning more than 10% of premium due to decrease in payroll, affirming findings revealed earlier this year in Insurity’s Workers’ Compensation Industry Trends Report
- 49% of respondents indicated that they are actively pursuing a better understanding of their portfolio accumulations/aggregates to cope with increasing catastrophe risk, followed by 32% who indicated incorporating more third-party hazard data
Reinforcing the value of advanced analytics solutions, Insurity’s sixth annual ROI study, also noted in the report, found that Insurity’s predictive analytics customers consistently outperformed industry standards, hitting a cumulative premium growth rate of 42% versus the industry average of 14%. This equates to over $965 million more in premiums when compared to $328 million had clients grown at the average rate.
“It’s clear that insurers who are putting advanced analytics into practice are seeing the value in both the short- and long-term,” said Marr. “The competitive differentiation provided by data consortiums, predictive analytics, geospatial analytics, and other forms of advanced analytics enables more actionable insights. We’re clearly seeing market momentum behind investing in data and analytics to drive better decision-making.”
Insurity is a leading provider of cloud-based software and analytics for insurance carriers, brokers, and MGAs. Insurity is trusted by 15 of the top 25 property and casualty carriers in the US and has over 250 cloud-based deployments. Through its best-in-class digital platform and with unrivaled industry experience and thought leadership, Insurity is uniquely positioned to deliver exceptional value, empowering customers to focus on their core businesses, optimize their operations, and provide superior policyholder experiences. For more information, visit www.insurity.com.