Insurers have historically collected a large amount of data, but have been slower to capture its value. As more insurance consumers move online to compare products & prices, and make purchases, the volume of available data has increased exponentially.
With powerful analytics technology, insurers can now use and make sense of new data in ways they had not previously considered. The insurance sector works on the principle of risk. Now in the age of Big Data, there is a way to assess risks more accurately.
Big Data: The Future of Insurance
The explosion in digital information being generated and stored and growth in analytics technologies are prompting insurance companies to invest in Big Data as a means to innovate.
Insurers nowadays offer telemetry-based packages, where customer’s driving behaviour is fed back to their system. Using predictive, statistical modelling; insurance companies compare driver’s behavioural data with thousands of other drivers in their database to have an accurate assessment of the driver’s possibility to be involved in an accident. This data is often gathered from a specially installed box fitted into the car or from an app on the driver’s smartphone.
With the increasing prevalence of wearable technology, a similar revolution is underway in the world of health insurance as well. Wearables and activity trackers like Fitbit can monitor a person’s lifestyle habits and provide an ongoing assessment. By improving on their unhealthy behaviors, customers can reduce their premiums on a sliding scale.
Big Data, New Opportunities
Not just in setting more efficient premiums, but Big Data has also helped insurers in cracking down on fraud. Through profiling and predictive modelling, insurance companies can now tackle fraudulent claims.
Each claim is matched against the past fraudulent claims. Fraudsters generally exhibit certain behaviors that can be detectable by computer analysis. If specific matches that are indicative of possible fraud show up, the claim is signalled for further investigation.
Big Data can also help insurance companies in marketing. By analyzing the available data and gaining more understanding about the customer, insurance companies can offer products and services as per the customer’s specific needs.
In a Nutshell
Big Data can revolutionize the insurance sector, in the form of improved customer service, efficiently priced premiums and better fraud detection. To capture significant rewards, insurers need to embark on the journey and rethink their approach to managing data and analytics assets.