As the value chain continues to become more digitally connected, insurers have the prerogative of better understanding customer segments and partners and adapt to consumer needs in near real-time. In the near term, most of the digital insurance consumers will likely be young, educated, and with higher levels of income.
To meet customer needs, most insurers have already started to collect a wealth of data. However, they have been slow in monetizing this asset. To understand and meet consumer needs, there is an immediate need to create new business lines or models to capture the value of data and analytics. As more and more insurance consumers shift online to interact, compare products and prices, and make purchases, the volume of available data is increasing exponentially.
Over time, Big Data and refined models will work for allowing risk pricing at an increasingly granular level. There is nothing to deny the fact that the insurance industry is a major component of the economy. It enables individuals and companies to take more risks, which further empowers innovation and growth. And the fuel of the insurance is data.
Technology revolutions of the last few decades and falling cost of technology create new opportunities for insurers to harness the data.
Data-enabled processes will minimize friction and streamline the customer insurance journey, from request for coverage to claim. Digitalization will thus help improve the customer experience and also the efficacy of back-office processes. The true opportunity, however, lies in leveraging the collected data to fundamentally change how a particular business operates and delivers value to its customers.
Engaging with customers
Most insurers are striving to fundamentally change their relationship with consumers through the use of real-time monitoring and visualization. Consumers who agree to let insurance companies track their habits can learn more about themselves, while insurers can use the derived data to influence behavior and reduce related risks. For instance, in the auto insurance industry, telematics is being used to monitor driving habits and behavior of the consumers in real-time.
Apart from providing digital transformation, the use of more data and better tools to collect and report on data means better compliance. And this is particularly because insurance companies are subjected to increasing regulatory mandates at various levels. As insurance companies consider new uses for the data they collect, they must also be aware of the mandates from multiple agencies. In all cases, the ability to collect, report, and use data makes regulatory reporting easier and more consistent.
Yet another important reason why insurance companies need to embrace data is for fraud detection. One of the biggest issues that insurance companies are facing right now is a fraud. According to most insurers, 1–1.5 out of 10 claims are fraudulently filed. This is alarming, given the limited number of policyholders that an insurance company may have. While some policyholders do it sloppily, some do it meticulously and get away with it. With the use of big data analytics, a large amount of data can be checked in a short amount of time. It includes a variety of big data solutions, such as social network analysis and telemetric. This is the biggest weapon insurers have for the detection of fraud while filing claims.
Inmediate is an insurtech startup from Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger, and NLP, making insurance processing and underwriting fast, cheap, and flexible. That gives for better processes, lower costs, improved time to market, and new revenue opportunities.