Making Social Data Operational
The value of social sites as a feedstock of data for insurance companies has long been apparent.
A new report from Celent, Using Social Data in Claims and Underwriting Creating a Social Risk Profile, examines the steps insurers must take to fit social data into existing business processes. Authored by Celent Analyst Craig Beattie and Senior Analyst Mike Fitzgerald, the report argues that enthusiasm regarding the potential of social data must be tempered by the recognition that use of social data is in its formative stages.
“Celent predicts that social data will be incorporated into core underwriting and claims processes over the next three years and become standard inputs into risk evaluation and settlement activities,” the report states. “This transition will not be without challenges. Key techniques that must be developed or enhanced include authentication methods, improved data extraction tools and more advanced analysis tools.”
In the case of underwriting, social media sites can help insurers divine the preferences, lifestyles and habits of individuals in order to build a more accurate risk profile. Moreover, Beattie and Fitzgerald note that risk profiles are not static, and social media can help keep insurers apprised of changes. “By its very nature, social data is real time and immediate,” the report states. “One of the reasons that companies and people are active in the medium is to update their network on recent events. These updates can also serve as a reflection of a changing risk profile. Having access to this information, and being able to effectively analyze it, should facilitate a continuous underwriting process.”
Nonetheless, insurers will need to think hard about the best manner in which to integrate this data into an existing process and automation environment. “The challenge for underwriting organizations is to develop methods and procedures for collecting, sifting, analyzing and incorporating this information into their existing system environments.”
A similar integration hurdle exists on the claims side. While anecdotes abound about insurers ferreting out claims fraud after viewing a supposedly injured claimant dancing in video posted on Youtube, incorporating such practices into standard procedures is a challenge. “Despite the utility of social data, to date, Celent is not aware of an information provider that has automated this function and offered it on the market. Claims searches are manual, and the sophistication of an inquiry depends on the experience and creativity of the user.”
In addition to the operational and technical challenges, insurers have to concern themselves with legal issues. “Regulation concerning the use of social data is evolving more slowly than the technology and potentially will significantly impact the use of information collected from these public forums.”