Business Intelligence (BI) has become so essential to the insurance industry that making strategic and tactical decisions in its absence is extremely risky. Insurance companies need to see their business across departments and deeper into each line of business. A holistic view of everything the business does promotes profitability by identifying areas to reduce costs and increase revenue.
In spite of enormous investments in ERP software and IT, MRS has found that managers and executives in many organizations continue to make key business decisions using information from voluminous reports or fragmented data in personal spreadsheets. Especially in the insurance industry, a strategic BI solution is indispensible to ensure the right information is in front of the right people at the right time and in the right analytical format.
We recognize three main issues that dominate the insurance-BI relationship:
- Tracking earned and unearned premiums.
- Claims cost-analysis.
- Fraud protection.
1. Tracking earned and unearned premiums.
Premiums can be paid upfront or over the length of the policy. This means insurance companies will often be in possession of unearned revenue. Laws, regulations and ethical business practices dictate that unearned premiums be invested in low risk, liquid assets to preserve capital. In our experience, tracking premiums with the help of custom IT solutions brings visibility to what money is earned versus what money is unearned, and identifies revenue available for investing and expenses. Equally important is the tracking of underwriting coverages and attributes. Accurate tracking of this information determines how much risk an insurance company has taken on and whether this accords with the plan for the lines of business and the target return on investment.
2. Claims cost-analysis.
Claims analysis ultimately comes down to reducing costs and charging competitive premiums. Firstly, there are costs associated with having an insurance product line. Insurance product offerings that insure high risk activity will require higher premiums to offset losses and maintain a reasonable loss ratio. The lower an insurance provider’s loss ratio, the less attractive the premiums charged to consumers will be. Secondly, process times, claim errors, and other related factors will affect the total cost of doing business. Leveraging IT systems can help this area in numerous ways:
- Quicker decision insights into fraud.
- Greater insights into higher risk customers.
- Proactive business management – do our claims need to change?
- Trending on the best claims-loss ratio for the product offering.
- Insight into repeat claimants.
- Geographical analysis of clients for rate and risk calculation.
- Easy access to certain trends through data modelling.
3. Fraud protection.
Individuals who make frequent and illegitimate claims are one of the most common forms of insurance fraud. Unfortunately, third party claims are difficult to track across insurance companies. We’ve seen how being able to track and prevent fraud reduces losses and costs that should be avoided – and business intelligence and data analytics solutions can provide significant help.
So, how can going digital help your insurance company?
BI solutions for insurance must be customizable tools that drive insightful decisions and customer focus. With enormous amounts of complex data to organize and synthesize into practical knowledge, business intelligence solutions offer benefits that are unattainable without them.
- Enjoy a comprehensive view of products, processes and operations.
- Identify cost savings and revenue opportunities to improve profitability.
- Work with a familiar interface for fast, effective and satisfying customer service.
- Replace silos of data in legacy systems with a single customer view.
- Increase customer retention with reporting efficiency and data accuracy.
- Share information across sales, marketing, and service.
- Support speed-to-market products and changing customer needs.
- Achieve scale and operational efficiency with an agile platform.
- Automatically update regulations and compliance to help underwriters accurately assess risk, calculate premiums and service customers.
“Coordination of large volumes of data is virtually impossible without the right BI solution. Embracing BI solutions that are customized and proven in the insurance industry means moving to an informed decision-making model that allows businesses to develop winning strategies that meet and exceed goals.”
Hear it first-hand:
“The MRS BI data mart solution built in SQL Server has given us greater insight into our underwriting and claims data. Our business planning meetings are now more productive than ever before.“
Toronto Mutual Life – Greg Holmes, Senior Vice President Systems