February 2, 2017

Thanks to our guest blogger, Tony Boobier for his input and vision on the major analytics challenges facing insurance and the industry mind set.

With over 30 years of leadership experience assisting companies who are developing analytical solutions, coupled with deep subject matter experience in data, analytics and management, Tony Boobier has a particular focus on the financial services sector. Specifically in the insurance sector, he has deep insight into the key business imperatives of operational efficiency (including claims management), customer analytics, and risk management (including location analytics).

Before operating on an independent basis, he held a senior worldwide role at IBM. Previously he had senior positions in the financial services sector, both for insurers and intermediaries. He holds professional qualifications in engineering, marketing, management, supply chain management and in insurance. He is an established international author and speaker.

Within the next two years the UK insurance industry will probably reach a tipping point in the use of analytics, if it has not done so already. This means that the need to make data-driven decisions will have been infused into all insurers, even if the actual implementation of this approach may not have fully happened. Insurers have already realised that their business is now too complex to be managed by intuition alone.

Experience is counting for less and less, as managers simply don’t have adequate experience of a data-driven, volatile and uncertain world.

The leaders of insurers are also needing to acquire new capabilities of awareness, agility and understanding of this new environment which some are terming the ‘Fourth Age of Industrialisation’. Some are suggesting that this is even impacting on the nature of leadership itself, which is moving away from being the flag-waving individual at the front of the crowd, into leadership becoming more of a process.

It’s a time of uncertainty for everyone involved, and analytics for insurance has never been more important. The argument for its use is compelling. Across all industries, the data and analytics agenda is likely to be worth £240 billion to the UK economy between 2016 and 2020, creating 157,000 new jobs. Of this figure, analysts suggest a revenue figure of over £4.25 billion for insurance alone*.

Increases in industry revenue for insurance alone are forecast at between 6% and 7% as a result of big data and the Internet of Things.

But yet there is a potential roadblock ahead, that of talent management. The UK’s digital skills gap is already costing the UK £2 billion per year due to an inability to fill key big data roles. The UK economy has significantly benefited by attracting the best skills from across Europe and the risk of losing international talent as a result of Brexit in whatever form it takes will become a concern.

The government is beginning to address this problem. The independent Migratory Advisory Committee (MAC) has already recommended that data scientists are added to the UK government’s Shortage Occupation List. But some would argue that this role, which focuses on the technical aspects of programming, analytical and data management skills, may be too limiting.

Tech UK, a UK technical trade organisation focusing on the IT sector, also said in a recent report** that adding this specialist skill to the Shortage Occupation List will not alone solve the problem.

If UK insurers are to benefit from this new industrial age, fueled by data and driven by analytics, then isn’t it essential that they collectively have a longer term strategy for organic growth of domestic talent to focus on data and analytics for the insurance sector? If so, then where does that originate? Will it be in the universities, professional institutions or in the client and vendor community itself? And if so, who will step forward to be the prime mover?

*’The Value of Big Data and the Internet of Things to the UK Economy’, by the Centre for Economics and Business Research (Cebr) and SAS, February 2016.

** ‘Understanding, Demystifying and Addressing the UK’s Big Data Skills Gap’ by Tech UK, October 2016.