Simon Axon, financial services industry director, international at Teradata.
Last year, a report was published by McKinsey which revealed a concerning lack of data and analytics maturity among insurers in Europe, the Middle East, and Africa (EMEA). While four standouts drove a 10-20 percent uplift in profit in 2022 by implementing AI and advanced analytics, most have yet to capitalise on the estimated €1.2 trillion in realised and potential value in analytics for the sector.
Meanwhile, insurers are facing a new threat: competitors from outside the sector are using AI-powered opportunities, technology, and data-driven insights to disintermediate the sector and offer insurance products directly to consumers.
Too much talk, not enough action
Given this reality, it is no surprise these technologies are at the top of the list for insurance executives. Overall, EMEA insurers seem to understand the need to rapidly accelerate their capabilities if they hope to survive and thrive in the AI-driven decade ahead. However, for most players, there is still a huge gap between talk and action. According to the McKinsey report, only one in five of the EMEA firms surveyed said they are using automated analytics for the majority of decisions, and nearly 60 percent described their maturity stage as aspirational. Interestingly, none of the firms surveyed, even the top performers, identified themselves as analytics-driven organisations.
Lessons from the leaders
Many other sectors are already way ahead of insurance in terms of generating value from advanced analytics. Leaders are finding ways to apply AI, machine learning, and other analytics-based approaches to business segments like marketing, renewals, claims handling, and customer experience. For example, Verizon, a global telecom giant, leverages advanced analytics to identify potential churners and tailor its retention programs. By spotting customer trends early, it is able to alter products and se