Insurers look towards greener pastures
The insurance industry is rapidly evolving. This means that insurers can be more active in the lives of their clients.
When insurers combine this personal interaction with modern analytics and applications – including telematics and predictive technologies – the industry is potentially on the brink of a revolution when it comes to risk prevention.
How do we make the most of this opportunity?
What is the next step? How are predictive analytics and new sources of information enhancing risk mitigation?
There is a plethora of opportunities to offer value added services; how connected insurers will hopefully drive better client outcomes and define the future of insurance will most likely be determined over the next five years.
“Looking at this through an operational lens from a client’s perspective, the industry shift provides insurers with a whole new era of speed and transparency which we have not been accustomed to in the past,” said Simon Gallimore, VP of Casualty Claims AIG UK.
He added that it ultimately enhances an insurer’s decision making ability and the ability to add value to clients.
Karl Gray – Global Head of Motor and Retail Lines at Zurich – pointed out that Big Data and the internet of things (IoT) allows insurers to target propositions in a careful and intimate manner. “Insurers also get a lot more insight when it comes to risk. If they can identify risk more accurately, they can price risk more accurately,” said Gray.
Important watchpoints
Every insurer wants to get closer to clients and accurately price risk. However, we need to appreciate the difficulty that is involved in this process; being a connected insurer means different things to different companies.
“Because every insurer has a different definition of what being connected means, the tools that an insurer uses to analyse data needs to serve a purpose. Insurers have got to use defined case analysis and they need to deliver feedback to users in real time. This analysis then needs to be integrated into their core system so that the information can be acted on immediately and in the future,” said Michael Anderson, Business Owner of Predictive Analytics at Guidewire.
Before an insurer can roll out integrated insurance as a concept, they need establish a defined strategy.
“Somehow, insurers have fallen into the habit of siloed thinking when it comes to data. They need to have data at the centre of their organisation as opposed to an afterthought. Finally, they will need to have the right kind of training and skills in place when it comes to data analytics,” said Parul Kaul-Green.
A long journey
Taking an insurer from being a connected insurer to a data driven organisation can be laborious. Some insurers have started the process while others are still debating what the first steps are.
“The insurance industry is at the beginning of the journey and there is no question that data is becoming something that is central to many businesses. We have a long way to go, but I feel that data analytics will move from being a specialised function to something that everyone within the organisation does. Every employee needs to be an innovator and every employee needs to be a data scientist,” said Gray.
Not as easy as ABC
The principles of becoming a connected insurer are understood. However, there are challenges that need to be overcome.
When insurers are dealing with legacy data, how do they begin the process of bringing this data to the heart of the organisation to make it practically work for them?
“In terms of practically, making data analytics work for the insurer, it is all about taking small steps in the right direction. Insurers also need to bear in mind that no learning comes instantly. It is a process. It is hard to find the right type of data scientist that will take the lead when it comes to data analytics. Most insurers assign a data set to a novice scientist who lacks context. They then build a model that is full of errors. Therefore, we need to train as we learn. The process will become seamless at one point which is when we need to break the model and rebuild it. Data analytics is not a once off process, it has to be continuous,” said Kaul-Green.
Show me the money
Insurers know that they need to get closer to clients and that in order to do this, data analytics needs to be at the centre of their organisation.
There are three important elements in this equation… time, skills training, and systems. These elements add up to a costly exercise for insurers. Can they afford this?
Writer’s thoughts:
Change is vital, if you are not making these changes, your competitors will. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
