Is data the new oil? Is data a vital commodity that will fuel the global economy? In today’s digital economy, Big Data holds the key to value creation across industries, unlocking better customer journeys, smarter business decisions and new revenue opportunities.
For the insurance industry, working with vast amounts of data is nothing new. Statistical risk assessments have long been at the core of the industry’s business model. Technological advances have unfolded at a dizzying speed over the past decade. There have been breakthroughs in fields like artificial intelligence, the Internet of Things, data analytics, and telematics. These technologies have generated troves of new data and opened crucial opportunities for the industry, while at the same time presented new challenges such as instilling cultures of Insurtech innovation, upgrading core systems, and establishing effective, efficient workflows.
As a recent Deloitte analysis noted, it’s one thing for insurers to have access to large quantities of data, but quite another to build the data infrastructure required to yield actionable insights that improve business outcomes. And don’t forget building new, data-hungry products and service offerings because customers and the market demand it.
How can insurers meet these challenges and extract the most value from Big Data? The answer lies in intelligent core systems that will support continuous innovation.
Data as a Value Proposition
To get the most out of available data requires insurers to digitally transform. This is not merely the introduction of flashy digital tools, but a digital-first mentality at every level of the organization. This has been no small challenge: While insurers have made significant investments in innovation, the COVID-19 pandemic and the ensuing shift to remote operations catalyzed the necessary change in mindset.
In the ‘new normal’, it’s imperative for businesses to move nimbly and strategically. To quickly make smart business decisions, data is indispensable. This data goes beyond the internal data traditionally collected by insurance companies. It can be leveraging drone footage to assess a car insurance claim after an accident. IoT sensors can proactively alert homeowners to flood risks, preventing the need for costly payouts. McKinsey stated that insurers can use data sources that are not directly related to risk assessment: For instance, it is easy to know when a home is up for sale, a home insurer can quickly engage the homeowner with a policy offer for their next home.
The bottom line? In a world that’s swimming in data, insurers need to provide a more proactive service and not just be there for coverage when something goes wrong, but have numerous touch-points and utilize their data to provide constant value”
In part 2, we’ll talk about breaking through the analog barrier.