4 Ways in which insurers use Big Data most effectively

Big data is still big news. For the insurance industry, it’s not just a lot more data although that is part of it; it is data that permits an unprecedented degree of analysis. Only now have we reached a point where data and technology are capable of making use of information we can gather.

As a result, data is now more valuable than ever and insurance companies have more opportunities than ever. It is crucial that organisations understand the value of their data and how it can be used to the greatest effect. One of the most intriguing aspects of Big Data for the industry is that data that seems unrelated to insurance, is actually proving useful in predictive analyses. Insurance companies have always been data-driven, but Big Data has opened up many new possibilities.

Big Data is certainly not a concept limited only to the insurance industry. Big Data has become a driving force in fields as varied as politics, social media and science. The good news for insurers is that no matter how much data they have, it is only a fraction of the data regularly gathered by an astronomy project. With the reassurance that at least they are not coping with an entire universe of data, how can insurers move forward and make the best use of their own Big Data?

1 – Underwriting and predicting customer behaviour

Insurance companies now have the ability to correlate an enormous number of factors about potential and current customers and make predictions based on those factors. Combining wellness and loyalty programmes can give insurers access to an enormous amount of data that can be used to make predictions about customers as well as encouraging healthy lifestyles that reduce the incidence of claims. Insurers have found that they are able to assess how factors such as socioeconomics, based on the neighbourhoods their customers reside in, can predict mortality and persistency. Specific professions can also be better linked to disability claims and mortality rates. These are just a few examples of the many ways in which insurers can shape their products and target their desired customers more effectively.

2 – Customer needs

Coordinating customer behaviour on the internet with call centre logs can provide valuable information about what online interaction may have prompted the call. Furthermore, rich data regarding call centre interaction, customers’ positive or negative experiences, and re-enrolment numbers can be examined. As with the underwriting information obtained above, one advantage of this data is that gathering it requires no action on the part of the customer.

3 – Detecting fraud

Big Data permits fraud investigation to switch from a focus on claims to a focus on individuals. Cohort analysis and behaviour among networks of people as well as the types of claims submitted by individuals and behaviour of beneficiaries can all be examined and analysed now. Predictive analysis can draw on more tools including modelling, database searching and test mining to catch fraudulent claims.

4 – Managing claims

More information can be captured and linked to claims including images, video and third-party notations. For fast track claims, Big Data can produce analytics that help to mitigate a tendency toward overpaying. Even a tendency toward litigation can be assessed. Data from social media can also be harvested to support claims adjustors. In the summer of 2013, the company Bright Planet analysed all the tweets about flooding in Toronto and mapped their locations for an insurance company so that adjustors could better assess whether a claim might need further investigation and could predict where the largest numbers of claims would come from.

In the past, a great deal of the information obtained by underwriters or gathered about customers might have been spread across a variety of databases and spreadsheets. The technology associated with Big Data means that information can now be collated in one place.

The process of switching to software solution that will allow Insurance providers to use their data most effectively is likely to be a slow one, but it is certainly a necessity if they are to keep up with ongoing trends. Insurance companies should look to continue to update their technology and take advantage of the leaps and bounds in data gathering and analysis that is rapidly altering the way the industry works and its ability to better care for both customers and its own bottom line