Research shows that insurance executives are recognising the opportunities associated with big data. Of course, they are no stranger to the importance of data analysis given how the industry is built around understanding market requirements and developing solutions accordingly.
With the help of technological advances, says Kelly Preston, data analytics manager at SilverBridge, it has now become easier to transform big data into actionable insights.
“The growth of insurtechs, in not only the local, but the global market, is adding to the momentum and drive towards big data transformation. Consumers are now spoiled for choice when it comes to their insurance needs. Big data therefore becomes an enabler for incumbents providing them with opportunities to transform and become more adaptable to the requirements of the digital age. This will assist in helping create the differentiation required to be more competitive,” says Preston.
An example of how big data can be used in this regard is pricing and underwriting. The ability to accurately price a policy based on complex risk procedures is critical for insurers. By making use of the big data available and incorporating artificial intelligence, this process can only become more effective and precise.
“The high-performance computing capabilities of the cloud mean insurers are no longer limited to on-premise solutions but can integrate the sophisticated insights derived from these online offerings. More efficient big data analysis can also expedite the claims process – a known challenge that frustrates many clients. More modern systems ensure vast amounts of data on claims are processed faster than ever to accelerate the process and potentially reduce premiums due to more effective pricing models.”
Unsurprisingly, IBM has found that customer analytics is driving big data initiatives at insurers. According to the company, this is consistent with the pressure insurers are under to transform from product-centric to customer-centric organisations. In this environment, the customer is the centrepiece around which data insights, operations, technology, and systems evolve.
“Most executives understand that big data can lead to real business advantages. It enables the capture and analysis of external data sources. Combining this with existing internal data allows the insurer to become more innovative with the development of customised and segmented service offerings,” adds Preston.
Again, think about the claims process. With the sheer number of claims to manage, insurers do not have time to closely evaluate each submission. Instead, approvals and rejections are made based on a combination of experience, the information readily at hand, and tacit knowledge of the person processing the claim.
“But machine learning throws this model on its head. The technology makes it possible to combine the human insights with a more effective and real-time analysis of data across all business units. This means claims are not only processed faster, but more accurately as well as with fewer false positives. As a result, instances of fraud are greatly reduced, customers are happier due to a smoother process and the business can grow due to increased loyalty.