Business intelligence tools catching up with insurance sector

The use of business intelligence (BI) solutions to determine general and life insurance policies can result in 10-15 per cent improvement in the bottom line of the insurance companies, said a board member of the Tariff Advisory Committee, which is a wing under the Insurance Regulatory Development Authority of India (Irda).

K Sampath, chief manager, National Insurance Company (NIC), said, "Over the last few months we have been studying the different BI tools available in the market and by April we will invest in BI tools and most likely in Oracle's BI discoverer."

Sampath, who is a member of TAC, noted that the public sector insurance companies such as New India Assurance, United India Insurance Company, Oriental Insurance Company along with NIC control 80 per cent of the general insurance market.

They are now planning investments in BI tools. "Implementation of BI tools can improve the bottom line by 10-15 per cent of insurance companies," added Sampath.

"With the de-tariffing regime, introduced this January, insurance companies are feeling the need for implementing high-end solutions such as analytical tools," said Rajat Sharma, programme manager, Frost and Sullivan.

In the $68 million worth the BI market, the insurance sector accounted for 4.5 per cent in 2006-07.

"The insurance sector's spend on BI solutions will grow at 18-19 per cent in 207-08," said Sharma.

"Besides better tariffs, BI can also reduce the churn in customers," noted Sudipta Sen, chief executive officer and managing director, Sas Institute India.

"The insurance industry has a high rate of customer churn where in the third year of business it loses the complete first year business," said Sen, and stressed that BI solutions can help companies address the behavioral pattern issues of clients and reduce this churn.