IDG Contributor Network: Data-Driven Innovation in the Insurance Sector


Data is an essential part of the insurance industry, where it is used to calculate and quantify risk. Although established insurance brokers and underwriters can be risk management experts, newcomers are exploiting new data sources and analyzing them to transform the industry. The incumbents have an advantage in terms of the data they already hold and the trust marks they manage, but a number of the largest companies are partnering with data-driven startups to create products and services innovative.

The data application transforms 4 key elements of the insurance value chain: customer prospecting, risk calculation, streamlining of application processes and creation of new business models and applications. of income.

Find and help customers with data

The Web is full of data that users leave behind when they use search engines and publish and share content on social media platforms. Social media monitoring tools are widely available and allow businesses to know when keywords are being used across a variety of social platforms. The answers can then be customized to answer and suggest possible products.

Consultants, Accenture Interactive, recently created a social media listening service for a major US insurer, which uses the Salesforce Social Studio suite of applications to help the company track near-real-time what is said their subject online. The result is a system that allows the insurer to view social media comments and publications within 10 minutes of their publication and to participate in the conversation, if any.

Calculating the risk of a selfie

In 2016, Legal and General America is partnering with start-up Lapetus Solutions to enable consumers to purchase life insurance by simply downloading a selfie. Their SelfieQuote service claims to be able to estimate an applicant's age, sex, and body mass index (BMI) from a single photo. It uses Lapetus' artificial intelligence-based facial analysis platform to streamline the application's workflow and fill in the longest forms for such a process. While this may attract fewer more mature consumers, the company hopes this will attract a more technology-savvy audience that may never have considered life insurance.

A recent McKinsey study indicates that while 70% of people go on the Internet to start collecting information about life insurance options, less than 30% complete the purchase of an online policy. With the arrival of a new generation of Aboriginal consumers in digital form, businesses in all sectors must be careful not to create barriers to their integration.

Use of data to improve the claims process

With the exception of annual renewals, most consumers do not have any relationship with their insurers after the initial application process, unless they have to make a claim. Traditionally, this process has been tedious for many insurers because of the checks to be made and the associated paperwork. It's expensive for the insurer and often frustrating for the customer. More and more sophisticated robots can help accelerate customer interactions and the application of AI algorithms and machine learning can reduce fraud through model detection.

However, the integration of external data can also enhance the customer experience and be part of new value-added premium insurance products. Berkshire Hathaway AirCare Travel Insurance offers an automatic refund to customers if flights are delayed or canceled by monitoring third-party flight data in real time. According to Forrester Research, some customers discover the flight delays of an AirCare refund before hearing about it from the airline itself.

Creating new business models and revenue from data

The rise of the Internet of Things (IoT) and related technologies is transforming the way data is generated from everyday activities. This is particularly evident in the auto insurance industry, where the installation of black boxes in drivers' cars allows for much more personalized premiums based on actual driving behavior. In the United States, Root Insurance has captured more than 1 billion kilometers of driver data and uses it in conjunction with its mobile app to create a more consumer-focused service than many legacy carriers in the industry. US auto insurance with $ 210 billion is able to provide. Only 3 years after the foundation of Root, $ 100 million of funds were raised, which earned the company $ 1 billion. Insurers who can collect user data in this way will create powerful barriers to late entry into this new world of data-driven insurance. Network effects have the potential to create virtuous circles of innovation and improve customer service, which will be more and more difficult to cope with.

How the incumbents tackle the digital challenge

Established players from all sectors have a range of options to deal with the rise of more agile, data-driven startups. They can develop their own programs and internal teams to transform their business processes and create new products and services. They can also acquire expertise through corporate acquisitions and expand their portfolio. These are and will remain smart approaches for some companies, but digital transformation can take much longer than the market allows and acquisitions often fail to deliver the promised synergies and benefits.

A third option is to collaborate with new entrants to leverage their expertise in particular niches and combine them with the assets that only a large established enterprise can offer, such as access to large data sets , financial resources and brand recognition. This is increasingly a trend in financial markets and plays on the strengths of all parties. One thing is certain, doing nothing is no longer a viable option.

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