It's generally accepted that the first written insuranceagreement was established with the Hammurabi code. It took quite awhile—over 3,000 years—before humankind could establish enoughunderstanding of risk transfer and mathematics and analyze enoughdata to develop the first actuary tables in the late 1600s. Sincethen, the sophistication within every part of the risk-sharingprocess—from rate-making to underwriting to claims—has increased ata quickening pace, driven by greater precision and predictabilityand built on an ever-expanding amount of data.

But despite the industry's developments associated withcross-company information sharing—bureau rates, claims databases,and so on—there has long been competitive advantage to be gained by the amount of data aninsurer could collect in order to fine-tune rates and underwriting,support new products, and carve out new market niches. It was amodel that favored companies with larger books of businessgenerating more data and with more staff resources available forinformation collection to establish greater certainty aroundpredictability.

 However, an explosion of new data sources is turningthat model on its head. "There is more data, and more access todata, than there ever has been—and it's growing," says MatthewJosefowicz, director of insurance at Novarica. "Geocoding,geographic information sources, aggregated consumer information,commercial databases, credit scoring, property peril scoring;detailed dossiers on individuals and businesses—there's a massiveamount of information that can be obtained on individuals andbusinesses simply by searching the Web."