The global insurance analytics market size was valued at USD 7.6 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 11.7% from 2020 to 2027. Rising adoption of advanced analytics techniques and data-driven decision-making techniques in insurance are expected to drive the market. Rising adoption of insurance analytics tools and services by the small- & medium-scale companies is further expected to drive demand for the market over the forecast period. IoT insurance is expected to gain traction as it allows insurers to offer new services and interact with their customers, which will subsequently drive the market.
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Insurance analytics provide services and tools that can be used to process and analyze data to generate insights, which are helpful in decision making. Growing competition in the market is encouraging companies to upgrade their existing business model, streamline operations, and enhance the processes. Moreover, rapidly maturing digital infrastructure and increasing fraudulent activities in the insurance industry is expected to increase the demand for analytics solutions. Owing to the changing financial policies and regulations across the globe, the insurance facilities are compelled to opt for analytics to control their operations.
Through the adoption of analytics, companies are focusing on improving customer experience as well as offering solutions based on a deep understanding of customer behavior and need. By using customer’s behavioral data, the insurer can revise and redevelop new strategies and products, which may get more sales success in the market. Furthermore, it allows insurers to empower distributors or agents with tools to identify various business opportunities and service existing customers. These solutions also allow companies to minimize overall customer handling cost, time, and fraud cases, which is expected to drive market demand.
The high cost of insurance is a primary concern for insurers across the globe. However, the analytics help the insurers in risk assessment by predicting the cost of insurance associated with the coverage. In addition, analytics also allow to minimize losses by detecting and preventing fraudulent behavior.
Data security in insurance analytics is emerging as a key market challenge. The process involves collecting and storing information, such as customer personal data and information about the financial product. Insurers deal with high volumes of data, which may include incomplete and inconsistent information, such as customer profile and financial information may lead to misidentified customers, duplicate marketing mails, and duplicate payments. This may potentially lead to loss of revenue, which can negatively impact insurers. These factors are expected to hamper the market growth over the forecast period.
On the basis of component, the market is segmented into tools and services. The services segment is further sub-segmented into professional services and managed service. The growing usage of smartphones has led to an increased demand for mobile-based insurance facilities across the globe. In addition, as more and more financial fraudulent activities come to light, the demand for insurance analytics tools is expected to grow over the forecast period.
The adoption of analytics has enabled insurers to develop a better understanding of customer expectations and design more personalized products and services accordingly. Through insurance analytics tools, insurers can now use insights to better inform and improve friction-free claims, risk exposure management, and accelerate underwriting operations. The insurance analytics tool provides enhanced security for businesses as well as individuals. The tool can be updated depending on the evolving activities of threats & vulnerabilities and generates more applications among businesses. These factors are further anticipated to drive the demand for tool segment over the forecast period.
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On the basis of end use, the market is segmented into insurance companies, government agencies, and third-party administrators, brokers, & consultancies. The insurance companies segment dominated the market in 2019. Increasing demand for insurance services and critical fiscal year report force companies to opt for advanced analytics tools. The propagation of third-party data sources eliminates insurers’ dependence on internal data. Data obtained from smartphones, social media, computers, and other industrial and consumer devices has become a main source for behavioral insights for the insurer.
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Increasing demand for online insurance solutions and for improved online insurance offerings are expected to drive the market segment. Furthermore, increasing demand for tailored consultation services from insurers is expected to drive the demand for analytics tools to offer customer centric services. Analytics also allows companies to speed-up their processes, such as policy issuing and after sale communication, which allows them to retain their customers. Moreover, these analytics solutions provide actionable insights to identify potential customers who are likely to commit insurance fraud before the event occurrence.
On the basis of application, the market is segmented into claim management, risk management, process optimization, customer management & personalization, and others. The risk management segment led the market in 2019 and is expected to maintain its dominance over the forecast period. Insurance analytics for risk management enables underwriters to get an automated result for better decision-making. It also reveals a hidden pattern in the data and provides insights into the impending risks, which help insurers to take preventive measures to avoid risks. These factors are expected to drive demand for the risk management segment.
Insurers need to use their data effectively to understand the potential market risks and use counter measures to mitigate losses, thereby driving the segment growth. Increasing demand for leveraging data is further anticipated to drive the segment. The customer management & personalization segment is anticipated to register the fastest CAGR over the next eight years. Insurers are now leveraging analytics solutions to offer proactive risk management services and additional policy discounts to match their customers’ requirements.
On the basis of deployment, the insurance analytics market has been segmented into on-premise and cloud. The cloud segment led the market in 2019 and is expected to maintain its dominance over the forecast period. Cloud deployment allows insurance analytics tools to be easily integrated with third-party applications and provides security to their online offerings. Cloud-based analytics solutions are also available on pay-as-you-go pricing, which eliminates upfront infrastructure costs.
Organizations are increasingly adopting cloud applications as they are compliant with regulatory prerequisites. For instance, Snowflake Inc., a provider of cloud data warehouse software for insurer, offers cloud-built data warehouse, which is certified by Payment Card Industry Security Standards Council, Health Insurance Portability and Accountability Act (HIPAA) compliant, and FedRAMP Ready. Cloud deployment also offers real-time account-to-account data sharing, which minimizes unnecessary data exports while transferring data for risk scoring. Furthermore, cloud providers offer new upgrades and versions for cloud-based data architectures that allow users to move up to a better software version without impacting their core operations.
Enterprise Size Insights
On the basis of enterprise size, the market has been segmented into large enterprises and small & medium enterprises. Many large-scale enterprises focus on implementing insurance analytics to improve customer loyalty and minimize overall infrastructure costs. Furthermore, insurance analytics tools allow large enterprises to meet the changing government regulations and standards set forth by HIPAA, Payment Card Industry Data Security Standard, and Federal Government. This is anticipated to drive the segment growth.
Insurers require a substantial amount of information. Leveraging insurance analytics, these companies can collect and analyze structured data associated with policy holders and unstructured data from public sources, such as social media. The analytics tool also allows large enterprises to generate simple and more transparent products. In addition, the analytics tool enables large enterprises to predict customer behavior and obtain insights to develop personalized policies, which results in improved customer satisfaction.
North America was the dominant regional market in 2019 and will retain its position throughout the forecast years. This growth can be 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. Furthermore, rapid advancements in data analytics software programs, cloud computing, and government initiatives to spread awareness about the need for insurance is expected to drive the regional market.
Asia Pacific is anticipated to register the fastest CAGR over the forecast period. The proliferation of mobile and real-time insurer platforms across the region has increased fraud events, which is accelerating the demand for secured analytics tools in the region. Rising adoption of cloud-based technologies and increasing digitization across insurance organizations is further expected to drive the market in the Asia Pacific. The rising number of insurer and third-party administrators in the region that are focusing on providing affordable plans is also expected to fuel market growth.
Key Companies & Market Share Insights
Industry participants invest more in R&D to develop new products and upgrade existing products. For instance, in 2018, Verisk Analytics, Inc. invested USD 47.6 million in R&D to update its line of products and to develop new products and services. Companies are also adopting strategies, such as mergers & acquisitions, mutual agreements, and collaborations, to strengthen their market position. For instance, in February 2018, Sapiens International acquired Adaptik Corporation, an insurance policy provider. The acquisition helped the former company to strengthen its presence in the North America region. Some of the prominent players in the insurance analytics market include:
- Hexaware Technologies
- LexisNexis Risk Solutions
- Microsoft Corporation
- MicroStrategy Inc.
- Oracle Corporation
- PEGASYSTEMS INC.
- Sapiens International
- Tableau Software, LLC
- Verisk Analytics, Inc.
Insurance Analytics Market Report Scope
|Market size value in 2020||USD 8.5 billion|
|Revenue forecast in 2027||USD 18.3 billion|
|Growth Rate||CAGR of 11.7% from 2020 to 2027|
|Base year for estimation||2019|
|Historical data||2016 – 2018|
|Forecast period||2020 – 2027|
|Quantitative units||Revenue in USD million/billion and CAGR from 2020 to 2027|
|Report coverage||Revenue forecast, company ranking, competitive landscape, growth factors, and trends|
|Segments covered||Component, application, deployment, enterprise size, end use, and region|
|Regional scope||North America; Europe; Asia Pacific; Latin America; and MEA|
|Country scope||U.S.; Canada; U.K.; Germany; China; India; Japan; Brazil|
|Key companies profiled||Hexaware Technologies; LexisNexis Risk Solutions; Microsoft Corporation; MicroStrategy Inc.; OpenText; Oracle Corporation; PEGASYSTEMS INC.; Sapiens International; Tableau Software, LLC; and Verisk Analytics, Inc.|
|Customization scope||Free report customization (equivalent up to 8 analysts working days) with purchase. Addition or alteration to country, regional & segment scope.|
|Pricing and purchase options||Avail customized purchase options to meet your exact research needs. Explore purchase options|
Segments Covered in the Report
This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global insurance analytics market report based on component, application, deployment, enterprise size, end use, and region:
- Component Outlook (Revenue, USD Million, 2016 – 2027)
- Managed Services
- Professional Services
- Application Outlook (Revenue, USD Million, 2016 – 2027)
- Claim Management
- Risk Management
- Process Optimization
- Customer Management & Personalization
- Deployment Outlook (Revenue, USD Million, 2016 – 2027)
- Enterprise Size Outlook (Revenue, USD Million, 2016 – 2027)
- Large Enterprise
- Small & Medium Enterprise
- End-Use Outlook (Revenue, USD Million; 2016 – 2027)
- Insurance Companies
- Government Agencies
- Third-party Administrators, Brokers, & Consultancies
- Regional Outlook (Revenue, USD Million, 2016 – 2027)
- North America
- Asia Pacific
- Latin America
- North America