Other parts of this series:
These days the insurance world finds itself in the midst of a perfect storm that will reshape the industry, by driving significant changes to traditional business models. Data lie at the heart of these transformations. For insurers, that means the ability to mine data—and get the right insights at the right time—is essential to success.
In this post, we’ll look at the various elements tied to data and that are driving insurance change.
Digital disruption has reached the insurance industry
The Internet of Things, social media, wearables (technologies and devices), sensor data for collecting real-time information for “NatCat” (natural catastrophe) risk management, all these and more contribute to an immense increase in data. This sheer volume of data makes it difficult to dig through, but that same data promises great insights into risk and performance. So, where to start?
Customers want to be heard
The amount of personal data available offers richer customer intelligence, which opens a door to innovations including more individualized insurance products. The new digital customer expects more personalized products and more tailored services.
Regulators have an appetite for increasingly detailed data
Quality and auditability around Solvency II, International Financial Reporting Standards (IFRS), Global Systemically Important Insurers (G-SIIs), Insurance Distribution Directive (IDD) and Packaged Retail and Insurance-based Investment Products (PRIIPs) put greater focus on customer protection, while requiring key product information to be clearly disclosed and be ready at hand.
In addition, both regulators and consumers take a much stricter approach to data privacy and protection, with regulators imposing tougher restrictions and consumers showing more awareness about how personal data is stored and processed.
So, what’s the solution?
Insurers should make data management a priority
Insurers are faced with managing growing amounts of data, fighting for lower cost data analysis and effectively generating value out of all the data they have. Unfortunately, much of the data is:
- Unstructured and of great variety, diversity and quality
- New to insurers
- Available across the company and in many cases with no real owners
New Fintech competitors, with their reputation for data analytics and digital disruption, are entering the insurance market. Can insurers keep pace with these new players? Luckily, tools and technology such as big data analytics, cognitive computing and artificial intelligence that can dig through the data trove are growing rapidly and becoming available to traditional insurers, who can use them to exploit new data sources.
In my next post we will look closer at the various actions insurers can take.
For more information, view our presentation: A New Approach to Data Management in the Digital Era