Some of the most successful companies in the world use business intelligence (BI), and the insurance industry is no different. Companies that use BI services and tools have many advantages over those that don’t, including:
- Better data storage options
- More accurate data analytics and reports
- Reliable predictive modeling
Business intelligence in the insurance industry is also becoming more advanced and accessible. Even small enterprises are able to reap the benefits of this evolving technology. Here’s why you should consider incorporating more BI tools and services into your existing infrastructure:
Business Intelligence in the Insurance Industry Boosts Data Storage
Insurance companies have to store and analyze a massive amount of data. For example, a healthcare insurance company collects information about a customer’s:
- Health history
- State of residence
- Other demographic information
- Claims history
And this is just some of the data that the insurance company needs to consider before and after enrolling the customer in a plan.
To collect and analyze all of this data, insurance companies usually use customer relationship management (CRM) systems and enterprise resource planning (ERP) technologies. The problem with using these different systems and technologies is that it’s very difficult to make the data actionable. Insurance companies first have to upload the data to one location so that actuaries, financial reporters, claims adjusters and other authorized staff have access to it. Then they have to process and analyze the data properly in order to draw the right conclusions from it.
Business intelligence in the insurance industry streamlines the data storage process in the following ways:
- You can set up an efficient data warehouse. IT firms that specialize in BI create a data warehouse that keeps all of your information in an optimized cloud platform. Data warehouse virtualization tools keep your data stored securely on a remote server.
- You can choose who has access to different data sets. BI portals limit access to different types of data based on the authorization level of the user. Claims adjusters only have access to their assigned claims and financial reporters only have access to the financial data they need to make strategic decisions.
- Your data is more secure. You can choose to backup important sets of data on the server. You won’t lose any data due to poor organization or server failure.
In the insurance industry, proper data storage and organization is absolutely essential. Advanced business intelligence tools can help you keep your data safe and make it easier to draw meaningful conclusions from it.
Insurance Companies Use BI to Generate Accurate Reports
Another benefit of business intelligence in the insurance industry is that it simplifies the report generation process. Even relatively small insurance enterprises have to generate a wide range of reports, including:
- Financial reports that track internal expenditures and profits generated from premiums;
- Operational reports that track staff workflows and productivity;
- Management reports that visualize data and enable managers to make high-level decisions; and
- Insurance reports that track and analyze claims.
To create these reports, you need to perform exploratory data analysis, predictive modeling, statistical analysis and other complex calculations. Furthermore, you have to present this data in visual form so that you, your staff and your investors can understand your findings. This is a time-consuming process that usually requires hiring a data scientist or statistician.
With business intelligence, the insurance industry can generate all of these reports without having any data experts onsite. Firms that provide BI services use report generation software that performs these complex calculations for you—ll you need to do is supply the data. These firms make it easy to upload new data into the storage system and, when done let you create accurate reports within minutes.
BI Facilitates Predictive Modeling
While BI tools make it easier for insurance companies to store data and generate reports, some companies are using BI in more revolutionary ways. Predictive analysis is one of the most exciting benefits,and it will likely become the new industry-wide standard in the next few years.
Machine-learning algorithms use past insurance claims to better predict customer behavior and incidents of fraud. These predictive models are superior to the actuarial models currently used throughout the industry.
Actuarial models collect demographic data and assess risk based on broad demographic patterns. The predictions only change if the demographic data changes. Insurance companies also have to collect this data regularly to make the best predictions. Moreover, the data can be outdated or even inaccurate, especially if you’re basing predictions on self-reported customer surveys.
By contrast, artificial intelligence (AI) and machine-learning models generate a specific predictive “score” for every claim. The more claims that an algorithm is fed, the more accurate its scores become over time. It doesn’t just base its scores on vague demographic information or surveys. It looks at actual customer behavior and claim outcomes to assess risk.
Insurance companies use this BI tool primarily for:
- Underwriting risk
- Financial projection
- Product profitability models
If you want to take advantage of this emerging technology or any other BI services, then you should hire an IT firm that uses the most advanced tools. Some firms already use machine learning and AI, meaning that you can make use of this technology without investing in expensive licenses or significantly altering your company’s existing infrastructure. In this way, you’ll mitigate risk, streamline staff workflows and provide your customers with the highest level of service.
To find out more about the advantages of business intelligence in the insurance industry, contact Tek Leaders today. Our team uses advanced BI strategies, including predictive data analytics, to help insurance companies accurately assess and mitigate risk. Or, if you have more questions about the BI services we offer, you can can reach us by email directly.