Big data and insurance industry: towards a tailor-made service?
How can insurance companies benefit from data? It is the perfect partner that can help them know their customer better and design a service that’s tailor-made for them.
Insurance sector suffers from lack of image. This market has a captive clientele (since they are legally obliged to continue paying after having purchased an insurance) that in return feels that they have to pay too much and that too for others. However, use of big data presents an unprecedented opportunity for insurance producers and distributors in three main areas.
First is profiling. Big data promises better profiling of insured persons on the basis of their behaviors. Insurance companies are already offering innovative schemes on the model of ‘pay as you drive’ scheme for auto insurance. However, because health is the product of food choices and exercise, cost of insurance premium is not same for everyone.
Predictive analytics and personalized insurance
The existing predictive analytics tools & techniques offer endless possibilities for targeting needs and for personalization of services. This approach is sometimes criticized as it provides the insured people their claim and negates the principle of risk-sharing by their individual accountability. However, since absolute prediction is not (yet) on the agenda, insurance producers, as we know them, still have a bright future ahead of them.
Data for insurance fraud prevention
Profiling and targeting form a foundation for the third area on which insurers need to work: prevention. Blockchain technology applications and tools for automated analysis of behavior of policyholders will help fight against fraud and improve the processes. The needed data for developing such prevention programs can be collected through connected objects (used in home, car or on oneself) that customers use. It is an issue that’s all the more important in terms of public health and that the state does not consider under Social Security, leaving room for private actors.
Insurance companies therefore are in a privileged position as data collectors. But are they capable of processing it? A myriad of innovative start-ups specializing in data are already developing the insurance services of tomorrow. Connected insurance, customer relations, Peer-to-Peer insurance or smart comparators- there is an emerging group of disruptive services and the traditional players must collaborate with the new.
Nadir Ghrous, COO, nam.R