In the latest Zendrive Expert Spotlight Q&A, we sat down with Srinivasan Sankar, AVP & Enterprise Data & Analytics Leader at The Hanover Insurance Group. We got his insights on the state of his industry, trends in insurance and in data & analytics that he’s particularly excited about, current challenges he’s facing, and how he’s working to better the industry in his role. Let’s dive in.
*Disclaimer: Srinivasan's opinions are his own and do not represent those of The Hanover Insurance Group.
1. Introduce yourself briefly. What do you do at Hanover?
Srinivasan Sankar: I’m Srinivasan Sankar, I head data & analytics for Hanover Insurance. I’m leading information architecture, and I’m in charge of the tools & technologies that are related to data management, data strategy, and data science and analytics.
2. As a data & analytics leader in insurance, what are the biggest challenges or problems you face?
SS: The data and analytics challenge specifically, though we’ve made good progress over the past few years, center around how we handle siloed data, and which emerging tools and technologies are able to tackle that. All of this is to ultimately help us better understand how data directly and positively impacts the business.
In fact, Hanover Insurance recently shared some great metrics around how data is positively affecting the company. These include a:
- 100 bps improvement in claims expenses via enhanced analytics
- $21 billion market opportunity to help agents improve efficiencies by leveraging insights and capabilities
- 6x minimum ROI for all analytics initiatives
- $240M NPW growth in Middle Market enabled by increase underwriting capacity via tools, analytics and data support
- $100M investment in platform, products and analytics in Core Commercial and Personal over last 3 years
3. What’s driving change across your industry/customers? Which trends/changes/predictions are you most excited about in terms of your role/industry?
SS: Future trends include the self-driving car - how do we manage insurance on that? For example, self-driving cars running red lights, or getting into a fender bender, etc. How do we manage risk and the premium side of things there? That will definitely be transforming.
We also saw during the pandemic how driving was disrupted - people were driving less and insurers were giving drivers credits.
"A lot of insuretechs are starting to cover the lifecycle of a customer, starting from a teen driver, to when they buy their first car and move into an apartment with rental insurance, then when they buy a house and start a family, handling life insurance. So insuretechs are starting to look at that complete customer lifecycle, and the strategic aspect of that – how various insurance products can be embedded into that journey."
What I’m most excited about, if you look at insurance – insurance companies rely wholly on information and data. So how they get that data, how soon they get access to that data, will help them make risk and policy decisions. That’s super critical.
4. Insurers have long relied on traditional risk factors for underwriting & pricing. How do you think access to critical driving behavior insights at the point of acquisition can positively impact underwriting/pricing, and in turn help insurers with long-term profitability?
SS: It’s not always a black box when it comes to insurance carriers. Another example I often give is, about 4-5 years ago when we started talking about automated underwriting using data analytics & data science – it’s not like it will completely eliminate the human touch. Humans and AI have to coexist.
All of this will have an effect on the bottom line (as we’ve seen from recent Hanover findings). That’s the positive impact of data & analytics, and that will help insurers with long-term profitability.
5. Claims costs are rising in today's economic environment. How do you believe data can help insurers mitigate these costs, or manage these costs better?
SS: Many insurers have processed certain claims within a specific threshold, completely digitally with automation – and also run some AI & ML to identify fraud, so when someone submits a fender bender picture it analyzes and makes sure the picture is authentic, then it processes the claim (which is typically smaller). That will help in terms of alleviating some of the high costs insurers face.
But high labor costs, repair costs, etc. require a lot to be taken on - they need to be factored into rate increases. Tying that back to inflation, you’ll notice as a personal auto insurance consumer, the increase in premiums year over year.
"Now, with this high inflation metric particularly in 2022, when renewals come later this year, we’ll see the effect of that in rates. It’s hard to predict what the effect will be. But insurance companies have always seen these types of cycles around inflation, so they know what to expect and how to navigate the market."
6. So is now the time for telematics to shine, given all of these rate increases and demand from consumers for lower priced policy options?
SS: The time is always right for telematics. Through my car, for example, I’ve seen telematics data. It will be very interesting to see insurers adopt usage-based insurance more and more.
Elon Musk even talked about the insurance industry years ago, because he’s collecting so much data around driving behavior, so now he can offer insurance products. Then of course Warren Buffet told him it wasn’t easy to get into - it’s such a complex industry, and the traditional players know how complex it is.
7. True or false: Insurers need to find ways to balance technology adoption with maintaining the human touch. Explain your perspective on this.
SS: As I said, you have to have that human touch. Nothing will be a “black box.” We will use AI & ML to get as much information as possible, so we can give decision makers the right tools. Actuaries for a long time have used Excel for specific formulas. Now many insurers are seeing the benefit of automating that process - using RPA, simply automation tools and technologies. It’s bringing a lot of benefits with it.
8. How far away are we from a full digitization of the insurance industry?
SS: We won’t have digital solutions embedded in all insurance processes - just wherever it’s possible and makes the most sense. Insurance carriers are finding ways to embed technology into their processes.
9. Many carriers might consider taking steps to bolster trust among stakeholders to boost retention and profitability, and this in part might be achieved through greater transparency in how insurers collect and utilize personal data. Do you agree?
SS: Having worked on GDPR policies and CCPA, and 18-20 other states piggybacking on CCPA, what I’ve noticed is that all the privacy acts are going after social media platforms or retail companies that are collecting lots of personal data. In insurance and banking, we’re already heavily regulated.
"Existing regulation will prevail over laws like CCPA. There are areas where PII is used across various policies or claims decisions, but it’s all done with proper security, privacy policies, and access control. There are stronger controls with emerging technologies now that are available. So I don’t see any concern that consumers should have around insurance companies analyzing or collecting PII."
I feel insurance companies already are transparent with consumers around what we do with their data. When you get into claims, where you’re sharing more information around car type, and information about the person you got in an accident with. For social media companies, your data is their product, so they’re making money out of selling your data. For insurance companies, it doesn’t work that way. Personal data isn’t the product, but instead helps insurers to provide the right service to you and price you correctly, process your claim faster, and more.
10. Insurtech partnerships have been making waves in the industry. Which ones are you most excited about and why?
SS: We use a lot of third-party data which helps us get a lot of insights. When you integrate enterprise data with third-party data, there’s a lot of value - certain things that we don't have, they provide. These are the types of partnerships I’m excited about. There are companies on the insuretech side, data providers that are forming partnerships with insurance carriers. Then of course there are more digital insurance agencies with no physical agency, companies that are servicing various products purely through the digital mediums like online and mobile.
From a technology aspect, I’m seeing a lot of partnerships with insuretechs around low code / no code. But again, these partnerships only impact certain processes, not the entire industry. Even traditional insurance software vendors like Guidewire and others are getting into this low code, no code aspect of things to embed into their processes.
"We see these big core insurance product vendors are tapping into low code, no code even on the automation side. We will see more of these partnerships in years to come. And I think this will have a positive impact on my role specifically – we can now do a lot more and deliver more business value."
In general, there’s an opportunity for insurance companies to partner with other types of businesses in the future. It all goes back to the customer lifecycle.
11. What’s your perspective on embedded insurance? Do you see it having a major impact on the industry in the next year, 5 years, 10 years?
SS: I think there is a market for embedded insurance. Especially with the pandemic, it’s accelerated. So, for example, airlines offered travel insurance during the pandemic as consumers wanted peace of mind. Now in the post-pandemic world, consumers want this additional peace of mind - embedded insurance, all kinds of it. Even many countries that I traveled to last year mandated certain travel insurance. I think this accelerated embedded insurance in general.
In the auto insurance space specifically, I think embedded insurance will be difficult - nobody has really done it yet. And you might have a car manufacturer like Tesla offering insurance, which is great to insure your Tesla, but what about other family cars or vehicles?
"This goes back to my point around the insurance customer lifecycle - embedded auto insurance will need to encompass the whole journey. It’s too much to handle to have separate carriers for different things in a given family. For a single Tesla owner, sure, maybe it’s applicable."
12. What haven’t I already asked you regarding the current state of auto insurance, and your role as a data & analytics leader, that you think I should have asked?
SS: I’ll end by just saying that ultimately, especially in the data & analytics world, every challenge is an opportunity. Whether that’s a business challenge, or related to managing data - I’m working on modern data architecture now, traditional data management challenges and the 3-5 year roadmap. We’re converting many of the challenges we have into opportunities.
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