Big Data can be a big game changer

Big Data comes from the little breadcrumbs that we leave behind as we go through our lives. We check emails, our cell phones connect with the cell phone towers, we use credit cards and we drive our cars.

Everywhere we go, we leave these breadcrumbs behind; and the amount of it is growing at a preposterous rate. And intertwined with, and driving, the Big Data phenomenon is what scientists call the Internet of Everything which not only includes people, but machines as well. So, the number of connected people and things is growing at an exponential rate all the time. Cisco (an American multinational company that designs, manufactures, and sells networking equipment) estimates that there will be more than 40 billion connected devices by 2020.

All of this brings challenges, but also incredible opportunities – picking and executing the right strategy will be the difference between the winners and losers over the next 10 years.

Anthony Miller, Managing Director of Lightstone, says that as a first step, insurers need to ask tough questions about the real drivers of value in their businesses and industries and the decisions they make on a day-to-day basis that influence those drivers.

Large, complex data sets are difficult to process using standard data management tools or traditional data processing applications. And most businesses have little idea of the data ‘out there’ or the techniques available for accessing and organising them.

Back to the future

Deon Olckers, CEO of STRIDE points out that today’s insurance industry looks vastly different than that of 20 years ago, and although a big portion of this is due to technological developments, it is mostly the policyholder who changed.

Numerous articles are available on the expectations and behavioural patterns of later generations. It is safe to say that insurers need to keep up with these generations if they want to remain relevant.

What we need now is instant decision making, accurate pricing, targeted marketing, technologically savvy applications, mobile accessibility and more than all of these combined, the ability to deliver on promises and expectations.

Interrogating the data

The only way to do this is to not only have access to data, but to ensure the quality of the data, interrogate the data, and use the data intelligently and ethically to deliver the best possible service to your customer. If you cannot do this, it is not a problem, they will simply move on to your competitor.

All of this is nothing new. We can go on and on about big data, what it is, what it can do for you, and what you can do with it, but if you do not have basic, clean data, you are not even out of the starting blocks yet.

The unfortunate fact is that most traditional insurers have very limited information on a big portion of their client base. This makes meaningful interrogation and application of the data all but impossible. It is riskier to base decisions on a small sample of bad data then it is to carry on doing business the traditional way.

Align your business

Over and above having your own data, you also need access to other data sets in order to allign business processes to the customer and deliver true end-to-end experiences across the policy lifecycle.

This cannot be accomplished without better methods of business integration and interoperability throughout the various stakeholders in the insurance value chain. Without standardised business processes and a common language, connectivity to value chain partners will remain a costly challenge.

So the question is: do we know what to do with the data? The answer is undoubtedly yes; ask any actuary and they will tell you. We know what we need to know, the questions should rather be: can we get the data and do we have the infrastructure to deal with it? If you can answer that, you are on the right track.