Data is the New Oil in the Insurance Industry

By Insurance CIO Outlook | Friday, November 30, 2018

With the dawn of cutting-edge technologies such as machine learning, artificial intelligence, and big data analytics, the insurance industry is undergoing a massive transformation in areas of risk assessment, fraud detection, and customer experience. By leveraging big data and analytics tools, insurers can derive valuable insights from large data hidden in silos.

However, most of those data are disorganized, unstructured and inaccessible, and it requires companies to use the right technology and solutions to gain actionable insights. On the other hand, the pressure around meeting regulatory compliance requirements that makes it mandatory for insurers to protect policy holders’ information further complicates the process.

Many insurers are thinking one step ahead especially when it comes to fraud detection and risk assessment which are the chief challenges prevailing within the industry. Insurance companies will benefit tremendously from using data generated by in-vehicle telematics devices, smart wearables such as Apple watch and other Internet of Things (IoT) devices. The data obtained from these devices will enable insurers to track, analyze, and store data, helping them to calculate risks appropriately and take suitable actions.

Combining external factors such as road conditions and driver’s behavior, insurers can harness the capability of predictive modeling tools that can help identify the likelihood of future events or ascertain past cases based on claims. In case of reckless driving behavior, insurers can provide timely guidance to drivers and track their improvements at regular intervals. 

Further, big data will not only assist insurers to predict potential risks but will empower them to detect various types of fraud, making it possible for them to track fraud and criminal activities through matching current claims with the past ones. Any variable or mismatch found in claims will immediately surface on screen, helping identify fraudulent and criminal activities. Moreover, big data will enhance the customer experience by enabling insurers craft personalized offers specific to each policy holder while also allowing them to customize premium strategies, and adjust insurance premiums.

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