Insurers are increasingly relying on big data-driven insights to assess risk, reduce claims, and create relevant value for their customers. Current models of doing business will no longer be valid as those who can use big data effectively will disrupt the current order. Although there have always been high barriers to entry into insurance; capital requirements and demanding regulations have, generally, kept interlopers at bay, the threat to incumbents now is not from full lifecycle like-for-like competitors, but start-ups with different ways of servicing shifting consumer needs and expectations. Disrupters who cherry-pick the most profitable aspects of the whole insurance value proposition and have new ways of handling the insurer-customer relationship can be even more threatening than full-scale competition.
The data that drives new insurance propositions will come from a wide variety of new, and previously untapped or ignored, sources. Data trails from our daily lives showing where we shop, when we get up, how much we move about, and many more commonplace activities. Combined with the increase in wearable and even implanted technological sensors will feed new algorithms and provide insights into risk and potential for rehabilitation as well as some physiological profiles.
Digital assets will be as revealing as bodily fluids in assessing longevity potential.
We are at the beginning of exponential growth, with massive amounts of data being produced. Organizations that learn to monetize the ubiquity, quality, and quantity of this data will have the greatest success stories in the industry. Digital technology and data analysis of this vast resource will enable insurers to know their customers better and to provide products and services that they need and want. Not all insurance organizations will rise to the challenge, those that do will succeed, those that do not will surrender their business to the disruptors.
The claims process should benefit from this development. When the claims process is strong, insurers are more efficient and relevant to their customers. Yet the hurdles are many: customers are becoming harder to please, fraud is a constant issue, and efficiency can be elusive. Against these challenges, predictive analytics is a powerful tool for insurers seeking a differentiated claims experience and high performance.
Predictive analytics analyses data to produce statistical models to help predict outcomes based on past experience. It can measure thousands, millions of data points, far more than a person and can, therefore, be more accurate and reliable than human intuition.
It can enhance the claims process by:
- Helping insurers to understand their customers and their needs – how they are likely to react to given situations and interactions
- Rapidly predict what a claim means – in terms of likely work, difficulties etc. and invoke tested strategies for dealing with it
- Focus on service rather than process steps
Change is endemic and lifestyles are changing faster than ever before in human history. The insurers that adapt and innovate will survive. Those that don’t embrace technological developments will fall behind. Vast new data streams don’t just enable change – they make it imperative.
Our Business Development Manager for Europe, Graham Newman of ClaimVantage explores these issues in greater depth in this new whitepaper. Graham will also be speaking on this subject at the Life Insurance International: Innovation Forum & Awards 2018 on the 7th of November.