Insurance analytics is the use of data analytics in an insurance company. It transforms the way businesses operate due to the generation of leads, improving customer satisfaction, reduction in fraudulent cases, prediction of risk factors, and enabling business growth. Moreover, it also enables insurance companies to generate leads on the basis of the availability of unstructured data available on the web.
Rising adoption of advanced analytics techniques and data-driven decision-making techniques, surging adoption of insurance analytics tools and services by the small- & medium-scale companies, rapidly maturing digital infrastructure, and increasing fraudulent activities in the insurance industry fuel the market growth. However, the data security concern is anticipated to hamper the market growth.
The insurance analytics market was valued USD 6.83 billion in 2019 and is anticipated to grow with a CAGR of 12.5% during the forecast period.
Surging Maturing Digital Infrastructure and Increasing Fraudulent Activities
In the past few decades, a significant increase in the number of fraudulent activities is witnessed in the insurance industry, which includes producing forged documents, non-disclosure of critical information, buying of policies in the name of a dead person or a person with a terminal illness, stating false reasons for claims, misappropriating assets, and inflating expenses. For instance, as per the industry, insurance companies lost over USD 6.25 billion to fraud in the year 2017–18, which results in higher premiums for genuine consumers.
Furthermore, the implementation of a regulatory framework by the government is also one of the factors fuelling the market growth. For instance, as per the Insurance Regulatory and Development Authority (IRDA), every insurance company is required to set up a fraud monitoring framework. This framework shall include measures to protect, prevent, detect, and mitigate the risk of fraud from policyholders/claimants, intermediaries, and employees of the insurance companies.
Insurance Analytics Market: Segmentation
Professional Services Segment to Grow with the Highest CAGR
The professional services segment is projected to grow with the highest CAGR on account of the increasing demand for support and maintenance services to keep the solutions updated in order to improve the efficiency of the organization. Furthermore, surging demand for up-gradation to meet the increasing customer needs is also one of the factors escalating professional services. Moreover, the growing usage of smartphones has led to an increased demand for mobile-based insurance facilities across the globe, further increasing the demand for professional services.
Surging Demand for Proactive Risk Management Services to Drive the Market
The customer management and personalization segment are largely driven by the surging demand for additional policy discounts and proactive risk management services. Furthermore, increasing understanding of the customers’ lifestyle to create customized coverage and match their requirements fuels the market growth. Moreover, increasing the adoption of digitization to get real-time updates also leads to the development of the insurance analytics market. For instance, insurers are now able to send automated messages to inform drivers in case of adverse weather conditions or major road repair, enabling their clients to take alternative routes providing an enriching experience.
Cloud Segment to Hold the Highest Market Share on Account of Its Cost-Effectiveness
The cloud segment holds the highest market share on account of the availability of a subscription-based service of cloud deployment mode, which enables organizations to utilize the power of data analytics while being cost-effective. Furthermore, a broad offering of cloud deployment model that includes 24/7 support and maintenance services and real-time access to data from remote location fosters the market. Moreover, offering higher security and the presence of a large number of SMEs across the globe, which prefers cloud deployment mode on account of budget constraint, boosts the segment growth.
SMEs to Dominate the Market in Terms of the Adoption of Insurance Analytics Solutions
The SMEs dominates the market in terms of the adoption of insurance analytics solutions. The cloud deployment mode offers a reduction in infrastructure cost and better support and maintenance services, further driving its adoption. Furthermore, increasing trends of digitization among the newly entered companies to meet the growing need of the customers and cater to their attractions are also one of the factors propelling the market growth.
Third-party administrators hold higher CAGR and are anticipated to witness growth during the forecast period. Third-party administrators (TPAs) can handle general liability, water damage, restoration, construction defect, automobile, property and casualty, product liability, professional liability, and other claims. The growth is attributed to increasing demand for insurance services and critical fiscal year report force companies to opt for advanced analytics tools. Furthermore, surging demand for online insurance solutions and improved online insurance propels the market growth. Moreover, increasing demand for tailored consultation services from insurers is expected to drive the demand for analytics tools to offer customer-centric services.
Impact of COVID-19
The impact of COVID-19 has a devastating effect on all industry verticals globally. However, the COVID-19 pandemic is the turning point for the insurance industry. The COVID-19 pandemic will force many insurance providers to reimagine their business operations and customer experience. The unique and unparalleled nature of this crisis brought about challenging new circumstances with economic shutdowns and physical distancing. Furthermore, the integration of third-party data to mitigate risk is increasing in urgency. Also, during this time, customers are reminded of how significant the role of insurance is in their lives.
Government Initiatives to Spread Awareness about the Need for Insurance Drives North America’s Market Growth
North America dominates the insurance analytics market and is presumed to grow during the forecast period. The growth is attributed to the rising adoption of insurance analytics tools and the strong presence of major companies in the region. Furthermore, end-use industries, such as government agencies, insurance companies, and third-party administrators, in the region are significantly focusing on adopting insurance analytics to offer customer-centric products. Moreover, rapid advancements in data analytics software programs, cloud computing, and government initiatives to spread awareness about the need for insurance is presumed to propel the regional market growth.
Increasing Fraudulent Events in Asia-Pacific to Surge the Demand for Insurance Analytics
Asia-Pacific is the fastest-growing region in insurance analytics market and is anticipated to witness growth during the forecast period. Increasing fraudulent events on account of the proliferation of mobile and real-time insurer platforms across the region is accelerating the demand for secured analytics tools. Furthermore, the rising adoption of cloud-based technologies and increasing digitization across insurance organizations is further expected to propel the market in the Asia Pacific region. The rising number of the insurer and third-party administrators in the region that are focusing on providing affordable plans is also expected to fuel market growth.
Insurance Analytics Market: Segmentation
By Business Application
By Deployment Model
By Organization Size
The Middle East and Africa (MEA)
Frequently Asked Questions (FAQs)