If you’ve been wondering what’s top of mind for Commercial Insurance, it’s preventive analytics.
Recently I had the opportunity to attend and speak at the Advisen Predictive Modeling Insights Conference in New York. The conference provided the insurance industry attendees with some fantastic points of view on topics ranging from the role of predictive models, managing the “data firehouse” to “Preventive Analytics – The Actual Cutting Edge”.
The preventive analytics session provided the audience with key takeaways on how the insurance industry can leverage preventive analytics to help commercial customers manage risks through loss prevention with industrial IoT and sensor-based monitoring and detection. IoT and the connected world provide the insurance industry the opportunity for insurers to transform the customer experience through more pre-emptive loss mitigation, to provide more value and remain relevant.
It was quite refreshing to hear this perspective from insurers when the industry has been relatively slow-moving, but these industry visionaries were very bearish. They stated the time is now and not to let the opportunity pass the industry. It is time to move beyond being able to “predict that something could happen” but rather to stay relevant with helping to “prevent and eliminate”, and minimize loss events. This is based upon applying causal analysis.
Fundamentally the basic principle of causal analysis “is to find causes that one can treat rather than treating symptoms. A root cause is the basic reason why something happens and may be quite distant from the original effect”. An example would be, before you launch an IoT/sensor based program is to study your claims to understand the reason of loss and determine if a sensor applied to the insured object/risk will detect a loss when used as an alert or notification to help prevent the loss. Sounds very familiar to loss mitigation and loss control, but rather than humans conducting physical inspections, it allows for on-going monitoring of the risk.
In the world of commercial insurance, the opportunities for this application of preventive analytics are quite compelling and we are seeing this with several new products as well as services by insurance companies. Take for instance HSB and Church Mutual with the “Connected Church” where the initial focus is temperature sensors to identify risk of freezing during cold weather conditions as an early monitor to frozen and/or a water pipe burst.
Other interesting preventive use case discussed was the usage of sensors by fast food restaurants to detect food entering the cook phase that had not been fully defrosted. This situation has been known to lead to food illness outbreaks –an extremely damaging event to the business and an associated insurance claim. And in the #insurtech space, Bean Insurance vision with the beam® brush is to change the world of dental insurance.