Four ways in which Big Data is boosting the Insurance Industry

In the current data revolution, insurers are in an advantageous position – owing to the large volumes of data they collect. For the insurance industry, data is arguably the most crucial asset, forming the basis for decision-making. To leveraging this efficiently for future growth, insurers need to maximize ROI from the information available to them.

The latest developments in technology make data analytics and utilization significantly easier and allow insurers to draw meaningful, actionable insights. Not only do these insights help speed up the underwriting and claims management processes but are vital for developing personalized services. In today’s age, with technology at their fingertips, insurers can use data to truly transform the insurance business.

Four ways in which Big Data is boosting the Insurance Industry

1. Process large volumes of data

First, large volumes of data provide insurers with the ability to utilize machine learning. It can process and analyze large volumes of data at lightning speeds. Further, we can also train Machine learning systems for specific business outcomes. For example, flagging claims that need a manual review versus those that can be automatically adjudicated. Separately, they also help in identifying customer preferences from past data. They can also propose products and services that customers may more likely buy (recommendation engines).

2. Decision Making

Second, as a Risk business, forecasting and predicting future risks lies at the heart of insurance. Data analytics tools today come with multiple built-in easy-to-use features that can help actuaries build, validate, and compare pricing models more holistically. Given the extent to which we can validate pricing assumptions through extensive simulations, Big data technology today allows more accurate pricing, and thus, competitive.

3. Connectivity

Third, it is a connected world today and data is the key driver for this connection. So, naturally, it is not only about processing large volumes of data efficiently but also about the ability to continuously collect better and more data. API-driven apps, IoT-enabled devices, sensors all allow insurers to collect vast amounts of data continuously. For example, insurers working with smartwatch vendors can collect daily health, lifestyle data about their customers. Besides, telematics data provide information about a customer’s driving habits, distance to work, etc. Adding such disparate yet insightful data sources to a pipeline that feeds data to insurers can enable insurers to gain a unique advantage in the business world.

4. Data personalisation

Fourth, “efficient digitization” is extremely important for insurers to maximize the benefits of big data tech. A “digital transformation journey” that provides a 3-to-5-year roadmap for becoming digital is not the answer. Technology, unfortunately, is moving at a much faster pace. Unstructured data can be converted to structured form – technologies can read images to get text, tech even looks at faces to predict age, gender, etc. Utilizing such tech that can be used without adversely affecting the risk assessment or customer satisfaction levels is something that can provide insurers the leap needed towards the digitization journey.

Summing Up!

Data security features have become better and better. From multi-factor authentication to blockchain security features, insurers can use either on-premises or on a public cloud service of their choice.

Understandably, one of the most effective ways for insurance companies to stay profitable is to leverage big data and incorporate it into their day-to-day processes. With a vast amount of data still unused and unprocessed, there is untapped potential in the industry. Insurers must tap into AI and big data tools and modernize legacy technologies to ensure they remain competitive in the field and can fulfil the growing customer demands.