The Data Dive: Is the Industry Levaraging Analytics to Its Full Potential?

Consider the amount of data that is amassed and traded between consumers and insurers. At the industry's most basic level, in order to provide consumers with the cost of the policies for their homes, cars, personal property, lifestyle and health, insurers must compare data given to them by consumers with data they have collected on a set of risk factors. Seems simple enough, but this age-old process could improve through better data utilization, especially in the era of usage-based policies.

It's truly staggering how much data we have to work with in the insurance industry. Approximately 2.4 billion GB of data is generated per day within this industry. If 100 GB can hold an entire library floor of academic journals and a single gigabyte of smartphone data is the equivalent of eight hours of YouTube videos, 2.4 billion GB is a staggering amount. In reality, the insurance industry is really the "big data" industry. But beyond policy writing, or even usage-based policy writing, what are we really doing to take advantage of it?

The industry is just beginning to put together an action plan for its customers. For example, we are seeing the increased use of mobile applications to provide first-notice-of-loss for auto insurance and to provide instant accident help. There's still work to be done before we can use data to create true customer centricity and gain better insights into their preferences and, in return, develop more successful cross-selling and retention initiatives.

Even though insurers have access to a lot of big data, challenges to integrating and employing it need to be first acknowledged. Because data is often difficult to work with, it requires the use of new technologies, tools, techniques and expertise The fact that there are 2.4 billion GB of data created daily means that this exponential growth is taking place at too quick a rate for the established methods to work any longer.

Being able to extract data quickly, process it and derive meaning from new sources, such as social media, is the key to breaking away from competition and gaining more robust customer insights to shape better-developed selling and retention initiatives.

The first step in better using data throughout the insurance sales cycle is investing more heavily in technology that can manage complex sets of data.

One example of a technology that insurers should be using more often is cloud computing. The cloud allows not only for larger data storage space but also for significantly greater IT and business agility and scalability, greater economies of scale and standardization across organizations, and better access to real-time data, resulting in improved productivity, with a lower total cost of ownership.

In fact, cloud can extend its benefits across an insurer's entire value chain, including how insurers design and market new products and services, interact with customers and business partners and manage risk. The benefits of cloud technology in the insurance industry are still being tested, but one thing is for sure: Exciting possibilities are ahead.

Benefits of Data Integration

We need to find ways to seamlessly integrate and leverage data throughout the insurance sales cycle— not just at a single, isolated point. Large-scale data integration finds meaningful customer insights between and across data sets. Consolidating vendor work orders, estimates, invoices and customer feedback scores into a single database is one way to track, analyze and manage vendor performance and enhance the overall claims outcomes.

Data integration also can be used to enhance the customer experience. In fact, carriers are developing a sophisticated view of claims service segments and sub-segments by various policy, underwriting and customer dimensions to improve customer experience. Additionally, many P&C carriers have deployed computer telephony integration and web technology to drive further efficiencies and a better experience in their sales and service operations.

The greater investment in new technologies and processes to manage and mine big data means insurers have the ability to map claims leakages and better manage claim payouts, understand, market to and price policies to service their customers via a more customer-centric approach, and quickly detect and mitigate fraud. This is the guide to improving profitability and customer satisfaction.

Relevant to underwriting, early detection of potentially adverse claim developments through enhanced big data analytics capabilities is sharpening insurers' competitive edge, allowing them to more accurately predict risk, and yielding cost savings.

In the future, insurance organizations will not compete on how the data is gathered and stored. Rather, they will differentiate themselves based on how well they deal with the collection of data and how they choose to use it to provide more tailored and competitive customer experiences.

Choosing to take advantage of the wealth of data that is available to insurers and utilizing the right technologies, processes and techniques to integrate and leverage data throughout the entire insurance sales cycle will result in less customer turnover and greater business outcomes.