How companies are leveraging data in the insurance sector
BIG DATA, for the insurance sector, has now become a business imperative
“Without big data, you are blind and deaf and in the middle of a freeway.” – Geoffrey Moore
Data is the biggest currency today. Mining data accurately not only helps in cutting down on fraud claims, but also helps in identifying new prospects, increasing sales, and engaging better with customers. In recent years, top companies and leading sectors like insurance have come to recognise that to compete with the extremely-agile datadriven competitors they must become more adept at leveraging their data assets. Big data is not just a buzz word any more. As consumers demand more from insurance companies, the need for a more efficient way to examine risks grows as well. Big data, for the insurance sector, has now become a business imperative.
The volume of data generated today is enormous. It is said that 90 per cent of the data generated was created in the last few years and this period is only going to get shorter. Datasets now are far more massive than what they used to be. This is because data now is being captured by multiple devices like smartphones, smartwatches, cameras, RFID devices, sensors, etc. Furthermore, there is abundant use of mediums like social media where the culture of ‘views’, ‘likes’ and ‘shares’ reveal a lot about likes and dislikes of the consumers.
Insurers in developed nations are known for their technology adoption and extensive use of analytics. They are used to predictive modelling to analyse customer behaviour, conduct segmentation, roll out offers and forecast claims. In India, insurance companies too are just starting to implement behavioural modelling and analytics.
Insurance, at its core, is a customer-centric industry. Intrinsically, the impact of data on customer expectations is an essential consideration of how insurers use data. Customers want a simple and transparent selection of insurance policies. They want to be able to connect with their insurer across channels, no matter what device they are using, where they are or when they need information. They also expect that their insurers should know the full extent of their previous interactions and be able to assist them quickly.
Data has always been at the core of the insurance industry business model. Right from product initiation to managing claims pay-outs, insurance operations continuum is highly datadependent. As the insurance landscape grows increasingly competitive, insurers are undertaking a slew of measures using big data analytics, ranging from bespoke products, accelerated claims settlement processes to advanced fraud prevention strategies, to live up to the challenges.
The secret to operational excellence lies in assimilating these datasets into meaningful insights to enrich the customer experience while maintaining profitability. Big data has proven to be a potent tool in the hands of insurance administrators. Unlike traditional data processing applications, technology allows insurers to manage and analyse complex datasets.
Big data-powered approaches find an answer to various business questions regarding the evolution of customer needs, the development of effective marketing strategies, customer retention measures, etc. Further, a comprehensive study of customer behaviour helps in setting up of proper support and guidance systems, enhancing overall user experience. Insurance marketing has also achieved a new dimension with the addition of demographic data points in the equation. Also, it is important that companies lead the way in developing technologies that empower users and set the right safeguards for data protection between technology vendors and insurers.
Having good data is one thing; knowing how to maximise its effectiveness is a different ball game. Insurers will need absolute speed and accuracy to deal with the huge volumes of data. Insurers making the best use of big data are best equipped to give customers delightful experiences while transforming their business practices with nextgeneration technology.
Authored by Girish Nayak, Chief – Service, Operations and Technology, ICICI Lombard GIC
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