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Big Data and Insurance: How Insurers are Leveraging Big Data to Transform the Industry

Tony AlmeidaIn this special guest feature, Tony Almeida, Insights & Data, Insurance Transformation Services Lead, Capgemini Financial Services, discusses how an increasing number of connected devices and new data sources are transforming traditional insurance models like never before. Tony is a seasoned executive with multi-industry experience in strategic planning, business unit creation and transformation, business development, and service delivery. He is a results-oriented leader with global experience solutioning, selling and delivering complex programs specifically in the USA, Canada, Portugal, Spain, England, Brazil, Argentina, Chile, and Japan. Tony has led the creation of BI/Analytics solutions and delivery for 20 years. In his tenure, Tony was in the forefront of Predictive Analytics solutions since late 2005.

Big data solutions have become persuasive and transformational elements in the insurance industry. They have enabled insurers to leverage advanced analytics to distillate data, especially customer data, from a broader range of sources and extract more insightful and actionable information they can use to improve pricing, claims settlement, risk options and more customer-centric products.

Historically, insurers have relied on segmentation to adjust for risk and pricing, resulting in customers being lumped into broad categories by age group, gender, marital status and location. Advancing big data solutions, however, allow insurers to integrate disparate structured and unstructured data sources, empowering them to gather more effective customer segmentation and sub-segmentation insights. With the power to analyze and understand data from a wider variety of sources, the industry is set to see an explosion in new customized products and services powered by analytics and predictive modeling. However, in addition to offering vast opportunities, this also raises challenges, most notably around managing risk at the customer-centric, product-creation level.

Productizing insurance solutions based on customer-centricity is a new paradigm for the insurer, enabling a focus on the customer specific life journey. In turn, the customer is more adept at understanding the details and benefits of their policy and insurers gain a greater understanding of customer preferences. As customers “bounce from one product to another” in search of the best policy, insurers can leverage the data insights from customer changes and feedback to inform engagement decisions from customer distribution underwriting to customer claims product distribution. Respectively, the customer relationship will be significantly impacted by a more near real-time informed customer who will shop based on price point until they build trust in their insurer relationship experience.

Insurers that take advantage of big data’s ability to effectively integrate disparate sources of customer information more effectively will create a learning engine. Over time a form of management that applies technology and new service paradigms to the challenge of improving business performance, will have more and more confidence in their risk management capabilities at the sub-segmentation level, enabling a more laser-focused customer view. This implies insurers will need to have access to more customer and prospect information such as their likes, social trends, communities and friends.

Increased access to and use of personal information is what will fuel data privacy and regulatory concerns. The use and possible ‘abuse’ of customer information will mandate that regulators be on high alert. The demand by customers to better understand their product options will also imply more disclosure on customer-centric products specifics including pricing, exceptions, exclusions, etc. As customers increasingly leverage multi-channels and devices to access their information, (the average person checks their smart phone 150 times a day), insurers must quickly match them to a product and be prepared to manage all regulations accordingly.

Herein lays the bigger challenge – how does an insurer sub-segment and yet match the customer to a specific set or sets of products? That level of understanding will require time and a well-planned insurer transformation journey fueled by big data insights. With a range of powerful new data insights at their disposal, insurers who can embrace regulatory challenges and implement effective strategies to interpret the growing amount of customer data available, will stand to gain a significant competitive advantage.


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