Over the next two years, many property/casualty insurers expect to advance their use of predictive analytics to both improve business performance and leverage big data, according to Willis Towers Watson, a global advisory, broking and solutions company. This seemingly makes sound business sense, as more than four-in-five insurers (83 percent) that have already implemented predictive models have recognized a positive impact on their carrier’s profitability.

The company’s annual Predictive Modeling survey found that even with insurers continuing to apply predictive modeling techniques to the tried and true areas of underwriting and risk selection, carriers anticipate significantly increasing model use across a number of other important business areas. For example, just seventeen percent of respondents are currently using predictive modeling for claim triage, but more than half (52 percent) intend to join them in the next two years; only ten percent utilize modeling for evaluation of litigation potential today, yet half (51 percent) plan to do so within the same timeframe.

Insurers also project their big data usage to grow across many business functions. Presently, big data is most useful for insurers’ work associated with pricing, underwriting and risk selection (42 percent). Tellingly, respondents say big data is not significantly helping any other business area. In fact, the next highest function (product development) for which big data sources are being used to improve decision-making received less than twenty-percent consensus. Insurers do expect that to change. Nearly half believe big data will benefit their company in two years in a diverse set of areas including pricing, underwriting and risk selection (48 percent), making better management decisions (46 percent) and loss control and claim management (44 percent).

Usage-based insurance information is the big data source that insurers think will increase the most over the next two years, followed by agent interactions via web, clickstream, phone and email data. Ten percent of respondents currently use UBI as a big data source, though this is expected to grow to 42 percent over the next two years. Similarly, merely two percent use agent interactions as a big data source now, but this is expected to grow to twenty-seven percent over the same time period.

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