It’s clear that social media usage has risen in all age groups, and the large swaths of information posted by individuals reflect preferences, lifestyles, habits, and, in some cases, neuroses. Insurers can use this mounting social data to create a real-time risk profile while shaping more effective claims and underwriting operations, Celent explains in its new report, “Using Social Data in Claims and Underwriting.”
Although there has been much buzz about the potential full impact of harnessing social data, until fairly recently few strategic solutions had surfaced. But Celent is leading the discussion on broader applicability, presenting a five-step model to operationalize social data. The model outlines the major decisions that should be addressed in implementation: what data should be used, what technical strategy should be adopted, how to acquire the data, how to analyze it, and how to integrate social data with existing operational systems.
Integrating these data inputs into insurers’ existing process and automation environment will drive more optimal results in both claims and underwriting, assert Celent Analyst Craig Beattie and Senior Analyst Mike Fitzgerald, authors of the report. They stress that one of the keys to successful implementation will be tempering enthusiasm with the reality that social data is still in its formative stages.
“This [social data] implementation will not be without challenges,” Beattie says. “Key techniques must be developed or enhanced, including reliable authentication methods, improved data extraction tools, and more advanced analysis tools.”
Among other topics, the Celent analysts discuss how staged automobile accidents and “soft” fraud— over-reporting damaged values after a fire, for example—pose a significant drain on the industry, citing some troubling statistics from the National Insurance Crime Bureau (NICB), including: an estimated 10 percent of all U.S. P&C insurance claims are fraudulent; and workers’ compensation fraud may cause insurers as much as $5 billion on an annual basis.
As such, Celent stresses that it is in the collective interest of both insurers and insureds (at least the honest ones) to reduce the amount and cost of fraud. Social networking data is already having an impact in this area, and the potential benefits are significant.