3 ways insurers can operationalize data

A single view of customer data will enable better risk assessment, resulting in more granular, and more accurate pricing for insurers, but most are far from having it, new research shows.

Eight in 10 insurance professionals say improving process efficiency, better risk assessment and pricing of risk are important drivers for digital transformation, indicates research from Research in Insurance and MarkLogic. Nearly three in four say increasing fraud detection is another important driver.

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But nine in 10 insurers have yet to achieve a single view of customer data, or say they don’t know if they have one, and many say it’ll be years before they do, indicates interviews and surveys of more than 200 global insurance professionals including underwriters, CIOs, CTOs, risk managers and others.

The researchers likened the insurance industry to a “super tanker” that’s slow to change its course. The industry is, however, aware of data opportunities and challenges. More than 80% of respondents said data issues are “high” on the agenda, including for underwriting groups. Seven in 10 said having a single view of all customer data is critical to improving the organization. Yet even for those who see the ultimate goal of data integration to be creation of a single customer view, nearly 40% are unsure as to when they’ll achieve it, the research shows.

The research underscores the great gulf between where insurers want to be and where they are. The top barriers to closing the gap are the complexity of legacy technology systems, which was cited by 55% of respondents, and the inability to integrate data from across the organization, cited by 34%.

The Data Advantage
At the same time, established insurers face a growing threat from digital upstarts such as Lemonade, Next and Root. Annual investment in InsurTech doubled last year to $3 billion, FinTech Global says. InsurTech players lack the constraints of legacy infrastructure. Their willingness to deploy new technologies focused on delivering great customer experiences is enabling them to rapidly build and acquire data to feed faster and more informed underwriting. Rather than super tankers, these digital natives are “speed boats” circling insurance giants, the report notes.

While legacy players still have an advantage in terms of the volume of data they have on consumers, data that cannot be easily and quickly accessed is a lost opportunity and any head start on data volumes will quickly shrink as InsurTechs grow. Such data informs underwriting and risk assessment — and leads to faster and better quotes — and thus more business.

By using data to improve pricing assessments, insurers will also be better equipped to deliver new products, improve the claims process, enhance customer loyalty and reduce fraud.

It is really all about the data. Are your decisions better than your competitor’s decisions because you have better data? How insurers access, analyze and manage data will increasingly separate winners from everybody else. Legacy insurers need to:

Integrate all data. The more you can integrate disparate data sets, the more effectively you can price at a granular and accurate level. Data silos are a big barrier. Without rapid access to all data, underwriters lack the full view to inform decisions. Getting data out of silos can take weeks while the InsurTechs access it within seconds.

Next generation database technologies make data integration easier. It doesn’t matter whether the data is structured, unstructured, derived from third-parties, social media, embedded in emails or videos, it can be ingested as is.

Hundreds of data points inform underwriting decisions. With data quickly integrated, underwriters will be free to do more quality assurance assessments and have more confidence in decisions. Informing the underwriting side with outputs from the claim’s portfolio, for instance, drives better risk assessment.

Hannover Re, one of the largest reinsurers, deployed new database technologies several years ago that enabled it to integrate and manage diverse datasets while securing a 360-degree view of relevant data. Because insurers shop business to more than one reinsurer, Hannover Re built a management information capability so that clients quickly secured on-demand quotes.

Data integration will also enable better understanding of customers and drive valuable cross selling opportunities. Legacy systems often don’t talk to each other so cross selling opportunities are lost.

Make data searchable. Four in 10 professionals say it is difficult to search, view and analyze data from the entire enterprise in one place, the research indicates. For underwriters, decision making is all about speed and ease. New database capabilities make Google-like searches possible so underwriters can get all the required information, from multiple datasets, instantly.

Secure data to enable safe sharing. The value in data often comes from using it to capitalize on business insights. However, not all data should be shared with all people. Hannover, for example, has customers in a self-service portal. Customers can only access data they are supposed to see. In many insurance companies, data is frequently copied for various tasks such as analysis and reporting. More copies mean more security risk. Having data in one place reduces that risk.

The single customer view can only be created if data is thoroughly and intelligent integrated. Data then becomes the enabler of change and innovation and “not the servant of outdated processes and systems,” the report notes. New database technologies will enable insurers to better understand customers, risks, and improve the outcome for both the insured and themselves.

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