According to a new report from Novarica many insurers are seeing real business value in leveraging big data for various aspects of their business. Although insurers have been slow to invest in big data, the trend is starting to gain pace.
Drilling down into the numbers the response is overwhelmingly positive for big data applications, with 18% reporting “significant value,” 13% reporting “some business value,” and 24% revealing plans to use big data in the next 12 months. Only 4% of respondents felt that the value was unclear.
How are these insurers using big data?
The most popular application right now is actuarial/product modeling, where a number of insurers have initiatives in place or intend to launch them within the year.
Big data is also being leveraged for underwriting, claims, and service. And there’s a feeling that it can have a positive impact in marketing as well. The larger carriers are taking the lead, perhaps because their pockets are deep enough to make the necessary infrastructure investments. According to Novarica, adoption of big data is increasing year on year across the board.
Interestingly, the report found that “some claims organizations have been struggling to realize improvements in claims outcomes through the use of big data.”
From our viewpoint, it’s about what kind of practical applications can be wrestled from such reams of information. Improvements in claim outcomes is possible, and is something that our customers have long realized. Big data can be put to good use. It just depends on the kinds of applications that can leverage it.
Drilling down deeper into the data pool is enabling companies to get much more pertinent information. For example, determining what are the ages and genders of the family members, their marital status, number of children, and even their hobbies, is generating the type of data that can be used to right-size contents coverage.
You need only compare similar homes in Cleveland and Santa Monica to see the potential importance of the deeper data stream delivered through utilizing the power of big data. The demographic contrast between southern California and Cleveland will, more often than not, suggest a significant difference in terms of the contents inside the respective homes.
This data is showing no correlation between coverage A and C. In fact, big data demonstrates that the amount of contents coverage needed has a lot more to do with who’s inside the house, its location, as well as the owner’s lifestyle and occupation, rather than the house itself.
Accurately predicting the total value of contents in an insured’s home is key. This kind of accuracy goes a long ways to preventing over-insurance, which can reduce premiums for the policyholder as well as reduce common fraudulent practices for insurers.
Imagine rather than spending hours recreating an inventory, you’re able to start with an itemized list and fine-tune, significantly accelerating the claim settlement, as well as helping to establish the loss reserve upfront. New products are emerging that give you the ability to deliver uniformity but also provide superior service to your insureds, handling claims more efficiently and accurately.