More emphasis needed on business intelligence to strengthen short term insurers
Short term insurers need to make more effective use of their business intelligence data to improve the quality of their customer base and better control and reduce the payout of claims.
This is the view of Rachel Stevenson, head of performance improvement at business transformation company, Ovations, which consults comprehensively to the insurance industry.
"It makes total sense that insurers enhance their processes so they can improve services to their customers, including the claims experience, but there also needs to be a strong focus on reducing the frequency and number of claims and the overall quality of insurers' books," she says.
"In many instances, insurers are focusing on fine-tuning their internal operations and procedures and trying to cut overhead costs. They also need to look at the bigger picture which includes analysing the payout of claims, cost per claim and the volume of claims."
Stevenson points out that short term insurance plays a vital enabling and sustaining role in the economy, making it essential for insurers to place at least as much focus on limiting expenditure as they do on maximising revenue through retaining and attracting customers. She believes that insurers can reduce their risk profiles by more strategically using actuarial and business intelligence information at their disposal.
"Insurers are in the business of mitigating risk for others, but it is also critical that they mitigate risk for themselves or they become weaker and this impacts negatively on the broader economy," she says, adding that it is also important for insurers to try to differentiate themselves from their competitors in the market place.
According to Stevenson, most insurers have access to business intelligence that can lower their risk profile, but they don't have the know-how to utilise this information effectively to be able to segment their customer base, analyse loss ratios and claims frequencies, and identify more accurately who they should and should not be insuring.
"In the future, it will become increasingly important for insurance companies to structure their products correctly, manage their customer base more carefully, extract and utilise business intelligence more strategically and effectively and control claims payouts as much as possible," she adds.
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