Big Data & Insurance Analytics versus Data Protection – AAE
Article Synopsis :
Insurance executives are turning to data for customer insights to combat dwindling profit margins and increased competition. The quest for insight is leading to a renewed debate on data privacy.
In “Big Data & Insurance Analytics versus Data Protection” Dr. Stefan Nörtemann, writing on behalf of the Actuarial Association of Europe, addresses the impact of digital technologies on insurance relative to data protection and privacy rights.
Big Data and Analytics are mainly used by insurers to analyse customer behaviours and perform predictive marketing, but the real value, according to the paper, is in new product development and increased real-time personalization. Big Data and Analytics can also be found in distribution, business processes, policy administration, claims management, software/system architecture, risk management and actuarial.
The paper explores data protection regulations in different parts of the world and how emerging technology challenges and opportunities stand up to modern data protection rules. Conflicts emerge such as big data vs. data reduction and data economy; insurance analytics vs. prohibition principles; and innovative products vs. right to informational self-determination.
The paper covers the data protection policy impact on two business cases – insurance analytics for predictive marketing, and innovative products packaged and priced on a pay-as-you-live basis. In both cases the paper explores through hypothetical examples how data protection laws might plausibly be violated.
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Digital Insurer's CommentsThe growing use of digital technologies brings data privacy concerns, especially to insurers who trade on discretion, security and trust.
To effectively address data privacy concerns insurers need to invest in infrastructures with flexible frameworks empowering customers to see which parts of their information are being used and how. InsurTechs like Civic, for example, enable users to keep track of their SSN usage in real time using Blockchain technology to prevent identity theft. The applications to insurance are obvious.
Insurers who successfully innovate around transparency and data privacy concerns will inspire the confidence (and business) of digital customers.
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