Big data is changing everything.

That's hardly a bold claim these days. Consulting firms, thoughtleaders, whitepaper authors and journalists are all predicting thesignificant impact data analytics will have on industries rangingfrom finance to health care. Enterprises and business leaders inthese industries are investing considerable time and effort intopreparing for the data science revolution that's already wellunderway.

The insurance industry is not immune to this rising trend, andbig data has indeed already led to some substantial changes in howinsurers operate. However, many of the fundamental concepts behinddata analytics have driven the insurance industry for decades.Utilizing customer data, risk analysis techniques, to set pricingis nothing new for insurance professionals. That data-drivendecision making is the backbone of how insurance works.

But even in the insurance industry, where data has always been acore business driver, the sheer volume of data and how it's beinganalyzed and put to use have created a seismic shift in how theindustry works. Big data—and the field of data analytics—isexploding beyond traditional risk selection and underwritingpractices into virtually every aspect of insurers' operations.

Only organizations that prioritize integrating this new approachto data and individuals who successfully adopt a data mindset willeffectively harness this new reality in the insurance industry.

Big data is truly changing everything.

An Overwhelming Fraction

In the last two years, humans have created more data than in the previous history of the entire humanrace. For insurers, this influx of data comes from a host ofemerging sources, including telematics, online and social mediaactivity, voice analysis and wearable devices, to name a few. Upuntil now, the massive quantities of data have proven to be alittle overwhelming. Insurance companies process only 10 to 15 percent of the data they can access. And most of thedata that is analyzed is structured, meaning it's organized andusually housed in databases that can be linked to each other andcross-referenced.

Unstructured data, on the other hand, is a lot more unwieldy andoften requires advanced data science techniques to analyze it andto use it to make business decisions. But unstructured data is alsowhere many of the industry-changing insights lie. That's whyemerging data analytics technologies centered on artificialintelligence and machine learning are focusing on giving thisunstructured data an order and purpose to drive business decisions.These new analytic approaches apply to relatively new sources ofinformation, like programs that scan customer calls for keywords,as well as traditional sources of data, like systems thatautomatically categorize adjusters' notes.

Insurers are working quickly to capitalize on these new sourcesof data and put them to good use in entirely new areas of businessoperations. Currently, 42 percent of insurance carriers use bigdata techniques in their pricing, underwriting and risk selectionprocesses. In two years, that number will jump to 77 percent,according to a 2016 Towers Watson report.

Similar leaps in big data use are expected in loss control andclaims management, understanding customer needs and productdevelopment. But the impact data will have is projected to gobeyond products, pricing and customers. The use of big data inmaking better management decisions and improving marketing effortsis expected to triple in the next two years, according to the samereport.

As data science continues to expand and pervade every aspect ofinsurance organizations' operations, an understanding of big dataprinciples cannot stop at data scientists and analysts. Allemployees, from the C-suite and department managers to claims repsand underwriters, must adopt a data mindset and fully embrace thisnew way of thinking.

Trusted Knowledge for a New Reality

As an established thought leader in the insurance industry andknowledge partner for insurance professionals, TheInstitutes has closely monitored the growth of data analyticsin the industry.

To address an identified vacuum of practical industry knowledge,The Institutes has developed the Associate in Insurance Data Analytics (AIDA™) designation — thefirst insurance-specific education program on data analytics. TheAIDA is more than just a new educational program; it's the latestmilestone in The Institutes' century-old mission of providingessential knowledge to the property-casualty industry.

Like the CPCU and dozens of other programs and designations fromThe Institutes, the AIDA empowers individuals and organizations tostay current and knowledgeable on the issues affecting anever-evolving industry. This designation combines established dataprinciples with cutting-edge information and best practices on bigdata and its impact on insurers.

The AIDA provides risk managers, underwriters and claims pros alearning course to help them develop a data mindset that willbecome even more essential to insurance operations in the years tocome. Managers, senior executives and data specialists can immersethemselves in the basics of the latest models and techniques usedin modern data analytics.

The AIDA offers an overview of data science and allowsprofessionals to drill down into how insurers are using data today,from predictive modeling and data analytics strategies likeclustering and classification trees to claims analysis, frauddetection and change management. It's a solution that providestoday's business leaders with the data acumen to work with datascientists to drive real innovation and change.

Learning That Delivers Results

For as quickly as this new reality is evolving, data sciencecontinues to be a developing field with ongoing challenges.Insurers are eager to find better solutions to issues surroundingdata security and data quality and to improve efficiency inprocessing large amounts of data, especially unstructured data.

As insurance organizations compete to solve these big datachallenges and implement more effective and robust data analysissystems, new opportunities and challenges are developing all thetime. Data scientists at the most forward-thinking organizationsare already looking past analyzing data using existing algorithmsand instead are using big data to solve clearly definedproblems.

The next era of data science will use machine learning toautomatically identify meaningful patterns in data and create thealgorithms and will define the opportunities for improvement in thefirst place. The AIDA designation details these emerging bestpractices, positioning employers and individuals to meet these newopportunities with a data-driven mindset that minimizes thelearning curve that comes with new technologies and approaches.

Organizations that can infuse this data mindset into businessoperations will have a serious competitive advantage overenterprises that don't catch on as quickly. Individuals who areable to drive improvements in organizational use of data sciencewill have a leg up not only in their current position but in theiroverall career. With the new AIDA designation from The Institutes,organizations and individuals have access to the necessaryknowledge to meet the challenges of the much-hyped changes to theinsurance industry head on.

To learn more about the Associate in Insurance DataAnalytics designation offered by the industry's most respectedknowledge provider, visit The Institutes' website.