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Data has played an important role in the insurance industry for decades, but as the quality of data and associated technology grows more sophisticated, its potential has increased exponentially. More robust data sets and new ways of gleaning insights from it are opening the door to more innovative and effective ways of doing business.

“Data is a critical tool regardless of whether you’re an agent or broker, underwriter, or claims adjuster,” notes Alyssa Guerrieri, Vice President, Contract Portfolio Underwriting & Optimization, E&S Wholesale. “It’s a foundational lever in making sound business decisions and enables us to understand and leverage opportunities in our current, past and future environment.”

Savvy insurers are staying on top of current trends so they can leverage data to gain insights into customer needs and preferences, streamline processes, reduce costs and improve operational efficiency.

“The insurers with the better mousetraps will allow them to procure better business,” notes John Anthony, Senior Vice President, Contract P&C and Excess, Nationwide. “If you’re not on par or better, you’re going to be well behind the rest of the industry and playing in the dark.”

Here are some trends to watch for in 2024.

Third-party data is helping paint a clearer picture

Long-time insurers have vast collections of proprietary data, but it doesn’t always tell the whole story. Today, insurers can access third-party data sets from an ever-increasing array of providers to fill in the gaps.

“As the availability and abundance of data continues to grow, there is detailed information being captured regarding almost anything you could imagine,” explains Justin Malmgren, Senior Actuary, Nationwide P&C.

With just about everything there for the taking, it’s critical to find a way to distill relevant information from the endless sea of data so you can put it to work for you. 

“Everyone talks about data, but the ability to curate information out of data is what we are all striving to do,” says Anthony.

Those who do it right benefit significantly from the additional risk attributes accumulated through third-party data. In turn, this can lead to more efficient triaging of risks, optimized decision-making and increased speed to market.

“Our partners’ ability to leverage third-party data as part of the underwriting process improves risk selection through evaluation of risk characteristics that may not be readily apparent or attainable in standard submission documentation. In a market where turnaround time is critical, access to these data sources facilitates the overall transaction by enabling our partners to more quickly – and confidently – prequalify risks,” adds Guerrieri.

AI is amplifying the power of data

You’d be hard-pressed to read the news on any given day without seeing something about artificial intelligence (AI). Advances in this space are touching just about every industry, including insurance.

“Carriers are exploring and integrating AI into their business strategies to achieve higher productivity and more personalized customer interactions,” says Vince Rullo, Director, Contract Portfolio Underwriting & Optimization, E&S Wholesale. “AI used to be a distant vision, but with advances in modeling techniques and data architecture, a surge of AI models have been developed.”

Insurers who lean into AI to help them quickly evaluate troves of data to inform business decisions will have a head start over the competition. 

“Those who shy away from new advances in technology will be left behind,” insists Anthony. “It behooves all of us to explore some of capabilities AI can provide with critical lens.” 

Predictive analytics as a game changer

As more and more data becomes available, insurers are also placing a greater emphasis on predictive analytics, which shifts the focus to identifying specific-risk profiles of insureds at point-of-sale versus grouping insureds together and having the best risks subsidize the worst ones.

More accurate insured-specific pricing will increase competition within the insurance industry as companies battle to find data that best segments their pricing structure.

“Predictive analytics is particularly valuable in helping us capitalize on future performance trends so we can be proactive instead of reactive in terms of managing our risk appetite and book mix,” Guerrieri notes.

“This will lead to changes in our business strategies with our partners,” adds Malmgren. “As data helps to uncover new insights around preferred risks, our business appetite may change, and we will have to effectively communicate that to our partners.”

The human touch isn’t going anywhere

The use of data is fundamental to industries across the spectrum, but in insurance, it’s important to remember that the human touch plays just as important a role. Ideally, data is used as a tool to help underwriters make more informed decisions about risks and pricing.

“Underwriting is as much an art as it is a science, and our workflows enable us to layer underwriting judgement on top of objective data to land on a final decision,” says Guerrieri.

A winning data strategy

By incorporating emerging technology and advancements in data analytics, Nationwide is setting the stage for a bright future.

“These trends are significant for the insurance industry, partners and insureds, because they will shape the future of the industry,” says Rullo. “There will be an increased focus on the needs and preferences of agents and insureds, while helping insurance companies stay competitive and drive innovation.”

In the end, Nationwide’s partners and insured, alike, will reap the rewards.

“Our data strategy allows us to better match our pricing and terms to the risks we see,” says Anthony. “It’s part of our value proposition to our partners. They know they can rely on us help them pinpoint where to curate new business and find new opportunities, which is a win for everyone.”