How Data Makes Insurance Work Better for You – ABI report
Article Synopsis :
What’s so different about data these days how does that affect the insurance industry?
In “How Data Makes Insurance Work Better for You”, the Association of British Bankers (ABI) explains how insurers can tap the latent value of data to improve client interaction, enhance customer experience, reduce cost, improve claims process, reduce fraud and strengthen underwriting and risk management.
According to ABI, data creates value in four different ways for insurers:
- Understanding the customer: Data helps insurers understand customers, essential to creating products and services which actually work for customers, rather than ones they have to work around. Understanding customers also means the ability to read and react to wider changes in society and placing individual preferences within that context.
- Getting the right price for the customer: Data helps insurers develop new products and, in some cases, develop new prices for old products (e.g. UBI in personal auto).
- Enabling the customer to make the right decisions to minimise their risk: Insurers, who assume the risks of customers, are keen on using data to help those customers better understand and control the risks they face. Think real-time loss-control engineering at the person-level.
- Improving the claims process: Insurers use data and technology to make the claims process as easy and flexible as possible, creating new operational efficiencies and combating fraud.
Though insurance as an industry is ripe for data-led transformation, effective regulatory and data policy is key to the process. Insurers must continuously engage with regulators and other sectors to share best practices, ensuring data is always treated with the utmost care and respect it deserves.
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Digital Insurer's CommentsWith better insights on customer preferences, lifestyles, and other key behavioural patterns, insurers are better positioned to deliver affordable, relevant, channel agnostic and personalised products and services.
The key to success lies in organizing and analysing the growing volume and velocity of data generated at the individual, personal level. The good news is insurers have tons of customer data. The bad news is that data is typically fragmented and/or locked in siloed data environments. Big Data (i.e. data from external sources) projects aren’t high on the priority list because most insurers are struggling to derive value from the internal data already in-hand.
As the pollster Arthur Nielsen once said, ‘The price of light is less than the cost of darkness.’ Society grows more digital by the day. Insurers lacking data analysis capabilities will find themselves operating increasingly in the dark.
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