Tag Archives: eagleview technology

Analytics at the Next Level: Transformation Is in Sight

Although insurance companies are embracing analytics in many forms to a much higher degree than other businesses, adoption by the insurance industry is still only in its adolescent stage. Deployment is broad but inconsistent. The use of analytics may be about to mature considerably, though, based on a recent series of mergers and acquisitions.

Currently, while a majority of large carriers use predictive modeling in one of more lines of business, and mostly in personal lines auto, a smaller percentage use it in their commercial auto and property units. Insurers recognize predictive analytics as a critical tool for improving top-line growth and profitability while managing risk and improving operational efficiency. Insurers believe predictive analytics can create competitive advantage and increase market share.

Fueling even greater excitement – and soon to be driving transformational innovation – is the recent surge of M&A activity by both new and nontraditional players, which have combined risk management and sophisticated analytics expertise with robust and diverse industry database services. The list of recent deals includes:

  • CoreLogic’s 2014 purchase of catastrophe modeling firm Eqecat, following its 2013 acquisition of property data provider Marshall & Swift/Boeckh; a significant minority interest in Symbility, provider of cloud-based and smartphone/tablet-enabled property claims technology for the property and casualty insurance industry; and the credit and flood services units of DataQuick.
  • Statutory and public data provider SNL Insurance’s 2014 purchase of business intelligence and analytics firm iPartners, which serves P&C and life companies.
  • Verisk Analytics’ 2014 acquisition of EagleView Technology, a digital aerial property imaging and measurement solution.
  • LexisNexis Risk Solutions’ 2013 acquisition of Mapflow, a geographic risk assessment technology company with solutions that complement the data, advanced analytics, supercomputing platform and linking capabilities offered by LexisNexis.

Other 2013/2014 transactions that have broad implications for the insurance analytics and information technology ecosystem include:

  • Guidewire Software, a provider of core management system software and related products for property and casualty insurers, acquired Millbrook, a provider of data management and business intelligence and analytic solutions for P&C insurers.
  • IHS, a global leader in critical information and analytics, acquired automotive information database provider R.L. Polk, which owns the vehicle history report provider Carfax. 
  • FICO, a leading provider of analytics and decision management technology, acquired Infoglide Software, a provider of entity resolution and social network analysis solutions used primarily to improve fraud detection, security and compliance.
  • CCC Information Services, a database, software, analytics and solutions provider to the auto insurance claims and collision repair markets, acquired Auto Injury Solutions, a provider of auto injury medical review solutions. This transaction follows CCC’s acquisition of Injury Sciences, which provides insurance carriers with scientifically based analytic tools to help identify fraudulent and exaggerated injury claims associated with automobile accidents.
  • Mitchell International, a provider of technology, connectivity and information solutions to the P&C claims and collision repair industries, plans to acquire Fairpay Solutions, which provides workers’ compensation, liability and auto-cost-containment and payment-integrity services. Fairpay will expand Mitchell’s solution suite of bill review and out-of-network negotiation services and complements its acquisition of National Health Quest in 2012.

Based on these acquisitions and the other trends driving the use of analytics, it will be increasingly possible to:

  • Integrate cloud services, M2M, data mining and analytics to create the ultimate insurance enterprise platform.
  • Identify profitable customers, measure satisfaction and loyalty and drive cross/up-sell programs.
  • Capitalize on emerging technologies to improve pool optimization, create dynamic pricing models and reduce loss and claims payout.
  • Encourage “management by analytics” to overcome departmental or product-specific views of customers, update legacy systems and reduce operating spending over the enterprise.
  • Explore external data sources to better understand customer risk, pricing, attrition and opportunities for exploring emerging markets.                       

As the industry is beginning to understand, the breadth of proven analytics applications and the seemingly unlimited potential to identify even more, coupled with related M&A market activity that will drive transformational innovation, indicates that the growing interest in analytics will be well-rewarded. Those that are paying the most attention will become market leaders.

Stephen will be Chairing Analytics for Insurance USA, Chicago, March 19-20, 2014.

Is M&A in Data and Analytics Setting a Path for Innovation?

The trend of acquisitions of software and data providers is continuing, but with a twist that may lay the foundation for innovation in the insurance industry. 

CoreLogic closed out 2013 with a bang by announcing its acquisition of Eqecat, a catastrophe modeling firm, on Dec. 20, adding to an already impressive list of acquisitions in the past year. CoreLogic added three real estate companies from TPG Capital Decision Insight Information Group–Marshall & Swift/Boeckh, DataQuick Information Systems and DataQuick Lender Solutions (credit and flood-services units)–further extending into the insurance data and analytics space.  

On Jan. 13, 2014, SNL Insurance, which provides a range of statutory data for insurers that links with public data, announced the acquisition of iPartners LLC, a SaaS business intelligence and analytics solution for both the property and casualty and life and annuity insurance industries. SNL says the acquisition will provide its clients a robust BI and reporting tool for operational needs.  

And Verisk Analytics, a supplier of data to insurers and banks, announced on Jan. 14 the acquisition of EagleView Technology, a provider of property images for nearly 90% of all U.S. structures. The images, based on digital aerial image capture, are analyzed to provide information to estimate property size and proximity to risks to assist in underwriting and claims assessments.

While the initial reaction might be to think of these as just another series of acquisitions, these actually point to the great possibility for change in how we access and use data in the insurance industry, a real mash-up of ideas and technology. As an industry, we are intensely dependent on data. But the data we use is fragmented across multiple organizations, accessed and paid for based on 10- to 20-year-old business/pricing models, requires significant integration and is often ineffectively used because of a lack of analytic capabilities. But these acquisitions have the potential to change this landscape.

These acquisitions and others are positioning the industry to be ready to move beyond long-held traditional offerings into “pay-by-use models” for both software (SaaS) and data (DaaS). Each offers the deepening analytics capabilities and expertise that can be used to analyze and create data from all the source data acquired, offering new data points for insurance business processes. Together, these create the opportunity to completely change the business model for data providers. This will enable the provision of new pricing, ease of access and new data based on analysis for many insurers, particularly mid-sized to small insurers, that may not have the expertise, resources or technology to do this by themselves.  

As new models emerge, the implications and the opportunities will be substantial. There could be a new wave of innovation for insurance products, business processes, markets, competition and business models. The playing field could be leveled for access to traditional and new data and information for insurers of all sizes and even for new entrants to the industry.

Who will take the first step forward in creating and offering a new model? How quickly will the innovator bring value and potential to the industry? If the traditional providers don’t, then companies outside our industry who see the strategic importance of data, cloud and new models will. Does Google come to mind?