It's not about big data-it's all about blending data

Big data is one of the hot topics that has been circulating in insurance markets across the globe of late, with industry experts discussing the sheer weight of data currently available to help improve business. Big data is simply everywhere. Open up a tra

Indeed, in the past two decades, data has grown at a rate which was unfathomable before the turn of the millennium. Back then there was only customer, geospatial and behavioural/transaction data. Now there is much more to contend with. And yet recent research, compiled by IT strategy research and advisory firm Novarica, has revealed that geospatial data - the most common type of external data in active use - is still only being utilised by some 29% of insurers.

Big data is not a priority for many insurers because they are getting to grips with the use of traditional analytics and this is, perhaps, too big for some in the industry to fully grasp. Instead insurance firms need to identify where the use of multiple sources of data can help them improve their businesses and reach their goals. "Big data has been on the agenda since the late 1990s, but the discussion is starting to get tiresome," says Clinton Brown, SSP's New Business Sales Manager for Africa. "It is the use of the information - and not the boasts of its size - that should be attracting the column inches."

The concept of blending information is vitally important and can help support decision making, reduce fraud and meet compliance requirements.
"Blending a number of different data sources is more likely to prove useful for those looking to improve customer experience, innovate and drive profitable growth," he says.

But why is blended data so relevant now when multiple internal and external data sources have been available for quite some time? Brown believes the growth of aggregators has led to challenges in the last few years as well as fraud, lack of pricing flexibility, more sophisticated pricing requirements, compliance reporting requirements to name a few more examples. "The reality is that insurers that aren't using data in this way will end up getting the poor risks that no one else wants, and with a significant volume of business flowing through aggregators this could result in a lot of poor business," he explains.

Consumer attitudes are also changing. According to technology research firm Gartner, by 2020, customers will make the rules on data, and the majority of personal lines cover will be bought on the internet. Brown says against this background a good online customer experience is vital and blending data will be crucial.

While customers like to control the buying process, providing options - such as other more suitable products and appropriate add-on products are also important. "Blending data from a number of sources - such as click through behaviour and data on previous purchases, combined with information on products, will help improve choice, the customer experience and sales," he says. "A lot can be learned from the online retail market" he adds.

The use of a number of data sources can be particularly useful in winning and retaining customers, and of course in cross selling, particularly as providing a seamless customer experience across all channels is becoming more and more important. In addition, the use of online, social media and mobile data blended with other internal and external data can help deliver new and innovative products faster and improve underwriting decisions.

Consumers today will browse the internet via a mobile device and review comparison sites, but they may also want to talk to someone in a call centre or chat online. In order to deliver a consistent experience across all these channels, insurers can use a range of data sources, including customer, risk, pricing and external data, blending them to support decisions in real time," adds Brown.

On the underwriting side, blending risk data, claims history, credit and fraud data with identity verification within a real time rating engine can assist insurers in writing more profitable business and avoiding undesirable risks.

Successfully combining data can also improve the claims process. In the moments prior to a surge event, blending weather forecasts, flood plain information and customer data can be used by insurers to ensure support services are in place to help and could even prevent or reduce claims.

Brown says the fact that data is big and constantly growing is undisputed, but it will be many years before access to the available data can be fully utilised by most organisations limited by legacy technology, complex processes and changing markets.

"In the meantime it is possible to drive innovation and growth now by blending data without necessarily needing to have the complete big data picture solved. So, it is not the size but the blend of information that is crucial and there are many other areas where blending the right data will be able to impact business success now," concludes Brown.