Crowdsourcing offers a compelling way to gather expertise from beyond the walls of the enterprise, drawing ideas and innovation from the world at large. Often, crowdsourcing efforts are incentivized with some type of monetary award that goes to the best solution for a business problem. That reward may be far less costly than paying a cadre of internal analysts and experts.
But will crowdsourcing work in the insurance industry? Allstate put the concept to the test by recently conducting a crowdsourcing competition, in which it sought to gain better insights into the relationship between bodily injury liabilities and vehicle types.
Ultimately, 202 players, competing as 107 teams, submitted 1290 entries. The winning entry was 340 percent more accurate than Allstate's existing method for predicting claims based on vehicle characteristics. Although the competitors developed their algorithms based on coded data, Allstate now has predictive insight on exactly which characteristics of a vehicle translate into increased risk of bodily injury insurance claims, and can apply that insight to its product and pricing strategies.
Crowdsourcing offers a compelling business case for insurers—as well as other types of companies—seeking cost-effective ways to expand innovation and problem-solving efforts.
Joe McKendrick is an author, consultant, blogger and frequent INN contributor specializing in information technology.
Readers are encouraged to respond to Joe using the “Add Your Comments” box below. He can also be reached at joe@mckendrickresearch.com.
This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.
The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.