Leveraging digital data lets insurers reinvent how they operateand reshape their customers' experience. Here are five key areas inwhich your organization can find new value.

Data is dramatically changing the way risk is underwritten byreducing uncertainty and improving carriers' flexibility andcontrol. But the availability of information – some might call itan avalanche – can feel overwhelming. By understanding businessoutcomes, insurers can gain greater insight into the changes aheadand consider the ways they can draw benefit.

Strong products and services are the backbone of insurance, butsmart data management distinguishes winners. Today's customersleave a trail of clicks, swipes, and comments that create a uniquevirtual identity for each individual. We call this trail a CodeHalo and it enables P&C insurers to find new ways to createvalue. Here is a look at five ways big data drives value:

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1.      Create more accurate risk profiles for more accuratepricing.

P&C carriers typically rely on historical analyses. Codehalos provide higher levels of accuracy by incorporating real-timedata on weather and geopolitical issues that had previously beendifficult to track. Now carriers can track risk as it changes overtime.

P&C carriers underwriting crops in the Midwest traditionallyrelied on a patchwork of sources. Now, hyper-local data can bringnew levels of detail to the carrier's underwriting. Today's cropsare smart fields, in that they generate a steady flow ofinformation about themselves. By coupling field data withaggregated weather data, the carrier produces a more refinedprediction of risk and loss. 

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2.      Uncover new exposures to drive increasedsales.

Call centers have long had access to data on customers' cars andhomes. They can now access additional details via each customer'scode halo, driven by social networks, digital footprints, andagency interaction—and unlock buying potential.

As a result, P&C call centers can proactively recommendproduct mixes that best serve customers' needs. Family milestones,such as a teenager getting a driver's license or adopting a puppy,signal opportunities for carriers to discuss managing newexposures.

In the sharing economy, agents are the insurers' frontlines.They conduct outreach via social media platforms and make theinterpersonal connections that carriers can't. The agentintermediary provides the hyper-personalized, one-on-onerelationship that customers demand. Imagine a carrier's catastropheresponse if its agents are following the customers on Twitter.Viewing real-time images, seeing the impact, and responding quicklyto the hardest hit areas plays a dual role for carriers: servingcustomers in times of need and increasing customer retention andsatisfaction. 

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3. Invest in predictive analytics to optimize pricingstrategies and drive increased profit within the existingbusiness.

Traditional data provides insight into the past; predictiveanalytics looks forward. By dovetailing analytics with the codehalos of smart homes, P&C carriers can predict more accuratefailure rates for the appliances they cover with extendedwarranties.

The Internet of Things (IoT) and its data is a growing reality.Consumers are increasingly installing IP-connected thermostats,lightbulbs, and home security systems. Acquity Group estimates 69% of consumers plan to buy an in-homeIoT device over the next five years. Soon, refrigerators willcreate code halos—this fall, GE Café will begin selling a refrigerator with a built-in Keurig coffeemaker that users cancontrol with their smartphones.

Tapping into this data – the devices' code halos – can offerinsight on the performance of appliances. Heat and ambienttemperature, for example, could affect components or indicatefailures. P&C carriers now have a warranty business that canchat with them, and this increased security and safety create atremendous amount of value with customers.

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4. Make smarter underwriting decisions to reduce costsand make more competitive offers.

Digital data is a game-changer for underwriting criteria.Carriers can organize information faster to better mitigate riskand improve the quality of their decision-making.

Take the example of a commercial property insurer thatunderwrites chemical processing plants. Its central exposure is inthe Midwest and New Jersey. To strike optimal capacity, it needs toblend as much exposure as possible into other parts of the country.Using code halos, the carrier can layer the aggregate amount ofexposure within certain areas, plot its risk, and then actively mapit in terms of loss prevention and control. Code halos for thechemical processing plants can include smart building attributessuch as power consumption, security cameras, and door and windowsensors. By creating a multidimensional view of the building andits risk, the insurer can access point-in-time checks for lossprevention audits.

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5. Sharpen your loss prevention strategies to improveaccountability and reduce overall risk.

Digital data drives new methods for prediction and prevention.Technology is putting a rapidly changing spin on loss prevention,sometimes literally. When Boston rooftops collapsed under recordsnowfall in February, the city of Somerville turned to drones to examine building roofs at riskof collapse and inaccessible to inspectors.

Rapid innovations in the technology space, from smart fields andsmart homes to wearables, are forcing rapid change upon theinsurance industry. By leveraging code halos created by eachcustomer, insurance companies can offer better, smarter, and morepersonalized service – simultaneously driving growth and profitwhile bolstering customer satisfaction.

Michael Clifton is leading the emerging business groupwithin Cognizant's insurance practice to bring innovative solutionsto market. He is known as a senior leader and strategist with broadexpertise in assessing operations and business challenges,developing strategies, and delivering results.