Social media is not expected to play a large role in insurers' future big data plans, according to a study released by research-consulting firm Celent earlier this month.
The report “Bigger Data: A Look at How Far Insurers Have Moved to Take Advantage of Opportunities,” surveyed 360 insurance professionals from life and P&C companies to shed light on the data challenges facing the industry, the technologies companies are investing in and where the most trusted form of raw data will come from in the next two to three years.
Only 26 percent of participants viewed social media as a key data source for insurers, preffered over only open government data. Of the six possible categories posed by Celent, customer-provided information and data from client-owned devices were deemed most trustworthy. Both are up 10 percentage points from the researcher’s initial study in 2013 currently at 57 and 50 percent, respectively.
“Many insurers see social media as a difficult data source because they run into identity issues and can’t tell if the information is reliable” said Nicolas Michellod, one of the study’s authors. “Willingly shared data is better. It is usually provided through an app so insurers know it can be trusted.”
Celent’s findings downplay social media’s importance in big data practices. That conflicts research from Novarica, released earlier this month, which predicted that social media will one day serve as a critical data source for underwriting, evolving from just a simple marketing tool.
Both reports acknowledge that the industry is far behind where it ought to be compared to other sectors. Overall, though, gradual progress has been made in the form of investments in predictive analytics and fraud prevention, according to Celent. Insurance companies are also finding it less difficult to collect external data and find value in it, compared to 2013. The change is likely the result of a recent shift in philosophy by insurers about how to invest in big data.
"If you compare the insurance industry with retail or banking, they are clearly behind,” said Michellod. “You have to compare the industry to where it was a few years ago. Then, you will see the progress.”
Though decreasing, the percentage of insurers struggling to analyze data rapidly is still high, Michellod says -- which dovetails with Novarica's conclusions as well. Roughly 80 percent of respondents said they are still having trouble analyzing data fast enough to meet customer demand. Insurers are struggling to provide the real-time alerts and notifications customers expect using the most updated information.
To fix this, the companies are investing just as much in the people they hire as they are any hardware or software available on the market. More mathematicians and computer science experts with advanced degrees are joining insurance companies, as a result.
“The problem for insurers when it comes to data is not a quantitative one, it is qualitative,” said Michellod “Companies want their staff to have a good background in math and science, but also in computer science in order to more easily utilize new technologies to perform specific queries.”
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