Insurance Analytics Market size is set to witness appreciable growth over 2021-2027. This is a result of the significant adoption of big data analytics in insurance domain to help actuaries build policies best suited for dynamic market conditions, business needs, risk concentrations, and patterns. The rising employment of AI in the insurance sector to allow increased access to data and help employees make data-driven decisions during events of fraud will further proliferate the industry demand in the year ahead. Insurance analytics refers to the process of collecting, extracting, and analyzing relevant insights from data sources to manage risks and provide insurance contracts in the field of health and property, among others. These analytics solutions and tools aid various companies and brokers to effectively track their expenses, ensure stable liquidity and financial operations, and monitor operational expenses, such as sales.
Increasing prevalence of insurance fraud cases, alongside the rapid digitalization of the insurance sector to help customers gain faster access to insurance services, will foster insurance analytics market trends. Insurance scams create damage worth nearly $80 billion annually across the globe. Situations such as these are driving insurance companies towards adopting advanced analytics solutions to aid in timely detection of fraudulent activities. Growing awareness about the benefits of digitizing the insurance sector, such as reduced time in business operations and improved claim processes, will also drive the demand for insurance analytics solutions in the coming years.
With regards to application, the insurance analytics market from the risk management segment will record considerable revenue by 2027. This can be credited to the increasing usage of data analytics by risk managers to prevent repetitive losses, monitor performance, and improve insurance premiums. In addition, the capability of data analytics solutions to help insurance companies distinguish between fraud and genuine customers will further boost industry expansion from the risk management applications over the estimated timeline.
From a regional perspective, the Europe insurance analytics industry is poised to depict a strong growth rate through 2027. This is due to the significant growth potential of the regional insurance market over the next five years, despite disrupted risk models and recessionary conditions. According to the Insurance Fraud Bureau, one insurance scam has been reported every minute during the pandemic in the UK, which will amplify the need for improved insurance data analysis in the region.
Key players in the global insurance analytics market include Liberty Mutual (LMHC Massachusetts Holdings), Metromile Inc., Lemonade Inc., Verisk Analytics, Inc., Sapiens International (Formula Systems), Pegasystems Inc., Tableau Software (Salesforce), Oracle Corporation, MicroStrategy Inc., OpenText, LexisNexis Risk Solutions, Microsoft Corporation, and Hexaware Technologies (HT Global IT Solutions), among others.
Strategic product launches, acquisitions, and mergers are some of the initiatives being employed by these companies to expand their footprint across the global market. For instance, in May 2021, Verisk unveiled a life insurance solution, EHR Triage Engine Plus, designed to bring automation and advanced analytics to distill medical insights in electronic health records. This solution was developed to help insurers accelerate underwriting as well as the buying experience of consumers.
The novel coronavirus pandemic has disrupted the businesses of insurance companies worldwide in many ways, from reversing earlier gains to generating new growth opportunities. In India, for instance, the rate of newly issued policies declined, due to the low purchasing power of customers and reduced assets under management, according to the IRDAI.
However, insurance fraud cases have witnessed a considerable surge during the pandemic, amplifying the need for robust risk mitigation solutions, and thereby generating opportunities for the insurance analytics market. According to the ‘Impact of COVID-19 Pandemic on Insurance Fraud Risk Mitigation and Investigation’ survey conducted by Insurance Institute of India and Lancers Network in collaboration with other entities, 27% of the respondents reported an increase in insurance fraud during the pandemic. Factors such as these are likely to contribute to the burgeoning interest in the integration of analytics in insurance domain over the years ahead.