The insurance industry has for years been collecting and using data to run a profitable business. However, the nature of data is changing with a growing range of data types and sources, coupled with the use of new advanced analytics.
Data-founded product development
The most significant shift is that data not only drives profitability on existing business models, but also product development, distribution, and marketing and sales activities, as insurers gain a more comprehensive understanding of their target markets and a 360-degree view of their customers. By using data from existing systems of record, augmented with data from external sources including social media and, increasingly, from telematics devises, insurers can develop a more complete picture of customers, understand who their best customers are and gain insight into what motivates them.
Data-driven product development helps digital insurance companies bring new products to market faster and with greater chances of success. Online customer interaction gives insight to the customer’s buying journey, providing insurers an opportunity to position tailored offers through client interaction following the “next click”, “next to” practice, which presents cross-sell or up-sell opportunities. Insurers can utilize the same possibility as digital bookstores, where you immediately get a visibility of discounts if you buy more than one book, or recommendations of other titles based on the books you already have chosen.
Mitigating risks with the right pricing
Better, more insightful data can be used to improve actuarial assessments and the pricing of risk. This can not only drive thorough segmentation, but could potentially enable insurers to price risks on a per-customer basis. A grown abundance of real-time data offers the potential to change pricing strategy altogether in a way that benefits the insurance company and rewards the customer.
For instance, insurers can use telematics data to understand a drivers actual driving habits in a way that’s far more insightful than analyzing his or her credit score and demographic data. That can enable the insurer to provide more than just an insurance policy but also add value to their client more frequently. And the pricing of basic insurance can be consumer-based and tailored to individual needs.
Insurers know how to integrate external sources of data and analyze that data in sophisticated ways – that’s integral pricing risk, something insurers know how to do well. So they aren’t starting from square one. They simple need to equip themselves with more data, better data and new tools to accept, manage and analyze it.
Learn more about data analytics and telematics. Join CSC’s Data Empowered Insurance Conference on November 17 in Copenhagen. Find the agenda and sign-up here: http://bit.ly/2dyPper
Liselotte Munk Poulsen is Industry General Manager at CSC’s Nordic insurance business. With more than 20 years of experience working with the Insurance industry, Liselotte holds a solid track record and has built a solid performing insurance software company with a substantial consultant business. Through a holistic end-to-end perspective of the global insurance industry, Liselotte enables her knowledge to provide value to the Nordic insurance industry. On daily basis Liselotte drives CSC’s Nordic insurance business, leading a team with deep insight into P&C and L&P. The clear objective is to leverage global capabilities that for decades has been developed and utilized by more than 1,900 insurance companies worldwide into the Nordic region.