Influence of Big data in Insurance

Steven Broz, CIO, Progressive Insurance

Benefits of Big Data for the insurance sector

Big Data has had a big impact on the insurance sector. For Progressive in particular, the use of Big Data has allowed us to collect and analyze more than 18 Bn miles of driving data, from which we’ve found that key driving behaviors—like actual miles driven, braking, and time of day of driving—carry more than twice the predictive power of traditional insurance rating variables, like a driver’s demographic profile, and the year, make and model of the insured vehicle. This is a massive breakthrough for the industry.

Please discuss how do you examine the effective and proactive use of data—how to consolidate, integrate and use it to drive business.

At Progressive, the data we’ve collected through our Snapshot program helps our customers become better drivers, and a result, potentially have access to bigger discounts so hopefully everyone benefits. To date, customers who signed up for Snapshot have saved more than $600 Mn.

“Big Data will continue to be a valuable tool for the insurance industry,”

Through our analysis, we’ve also learned that:

Drivers with the highest-risk driving behavior have loss costs that are approximately 2.5 times the costs of drivers with the lowest-risk behavior—suggesting that the range of rates can be far wider and more personalized than they are today.

• The majority of drivers who are lower-risk subsidize the minority of higher-risk drivers.

Please discuss what are some steps insurance companies can take to foster innovation and/or growth. Also if you can share a few points on key technology areas that insurance companies should focus on to follow the market evolution.

Something we’re particularly proud of at Progressive is our Innovation Services, which is a multi-pronged effort that consists of four pillar programs:

• Our Business Innovation Garage (BIG), allows anyone at Progressive to test and explore new ideas. BIG helps you quickly set up and run experiments, design and build prototypes, realize results and share key learnings.

• Action Factory events use a collaborative, engaging methodology to accelerate decision-making, alignment and action.

• Code Jam is a quarterly event that convenes employees to apply new technologies, techniques and tools to the latest needs of our customers.

• Edison celebrates those who are not satisfied with the status quo. It encourages people to work together to discover new and improved ways to grow our business, delight our customers, increase efficiency, and enhance our workplace environment. In 2015, more than 11,000 of our 28,000 employees participated in some way in our annual Edison challenge.

A key component of Innovation Services is employee engagement, which is integral to fostering innovation as your employees should feel inspired to come up with new ideas and try to solve new challenges.

Over the years, we have witnessed a massive change pertaining to the role of CIOs depending on the organization, the industry, the business strategies, the prevailing market conditions and the financial climate in terms of business value. How would you describe your own role as C-Level Executive has changed in the past couple of years.

I’ve only had the CIO job since February of 2016, so it’s difficult to say what has changed. Perhaps the CEO indicated a change by selecting a CIO with a business background. It may reflect a desire for a detailed knowledge of the core business, an understanding of the strategic benefits of architecture and an ability to collaborate with my peers on using technology to drive the business forward.

With your rich experience of managing IT organization and steering technology for your enterprise, can you please share some of the unique lessons learned and your advice for fellow CIOs.

I’m so new in my role that I’ll just share the advice my boss gave me when I got hired: use the first year to get familiar with the key technologies that form the foundation for our current and future success. I’ve done my best to follow this advice and I’ve learned a tremendous amount from my team. I’m not an expert, but I can see how we can use the right investments to connect our successful past to even more exciting future.

What does the Big Data mean for Insurance Industry.

Big Data will continue to be a valuable tool for the insurance industry, as it allows insurance providers to gain more and more insights about customer driving habits and preferences. When our customers share more data, they get more accurate prices and more tailored experiences.

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