‘Big data’ combined with the latest generation of analytics provides the opportunity to drive differentiation, profitability and growth.
Big data has become something of a buzzword over the last few years, especially in the data driven insurance industry. And, according to Clinton Brown, SSP Sales Manager for Africa it’s no wonder as 90% of the data in the world has been created over the last two years and every day we are creating a further 2.5 quintillion bytes of data.
Against this backdrop, Brown says it is possible for insurers and UMAs to use a wide range of data across every part of the business and that it is essential that it moves beyond its traditional realms actuaries and underwriters.
Big data is a direct result of an increasingly digital world with a growing number of data sources that are openly available via websites, social networks, and mobile devices. While this is clearly a challenge for insurance firms, it is also a tremendous opportunity. “There is a whole new world of data for insurers to capture, interpret and use across their operations. It’s almost infinite and that is a massive opportunity.”
Brown says there are opportunities to use big data to better understand market opportunities and propositions, products and services to serve customer needs better and also to involve those customers in the design of what they purchase and use.
In terms of handling the range and volume of data, Brown suggests identifying the tools and expertise that are needed to take the next step. He points out that a new kind of expert will be required to get the most out of this critical raw material and that there are huge opportunities for those businesses that can analyse, interpret and apply data.
“Insurers and UMAs need be pragmatic when selecting the areas to focus on. For example, the use of data analytics tools can help crunch the huge volumes of data and enable insurers to focus on using the information created. But, they also need to change their mind-sets if they are to speed up the application of data and make the most of the business opportunities they present. Data is no longer a topic to just to be dealt with by actuaries, underwriters and the IT team.”
This view is echoed by international research and advisory firm Celent, who in a recent global survey found that a minority of insurers are currently using external data. However, the study also found that insurers do understand the potential value in leveraging external data sources in different domains of their business, with pricing optimization, customer segmentation, underwriting, and fraud detection being the priority areas.
“The opportunities are mind boggling but no insurer can take on all of this at once. The first step is to choose an area on which to focus and use this to prove the benefits of capturing, analysing and applying a new data source.
Whether this first step is the implementation a telematics based motor insurance solution or the use of another rating factor based on externally sourced data, what matters is getting started, proving the potential, and starting to deliver value from big data.”
Prepared on behalf of SSP by Cathy Findley Public Relations