Insurance being an extremely data-intensive business, depends on huge amount of data and it also generates a huge amount of data in course of its operations. Both these types of data are stored in structured fashion in the way that helps stakeholders get unique insights and helps in the overall improvement in client service and compliance with regulation.
In their course of routine business, insurance companies collect massive amount of data—both structured as well as unstructured. This is the data that insurance companies generate through transactions (digital and textual) and in varied degrees from external world, be it government agencies, data bureaus, or social media. In various countries, there are several agencies, government and non-government, which make data available to the companies in a lawful manner, though in India sources are limited. With increasing complexity of business and fierce competition, success of any organization depends heavily on its ability to process this data effectively, analyze the same, and use in real-time decision making.
This data is used in building complex statistical models for pricing, understanding customer demographics and behavior, thereby sharpening campaigns, cross sell/upsell, fraud analytics, customer service, etc. With the increasing influence of social media, customers are freely talking about product, brand, companies day in and day out, both negative and positive. This generates wealth of data in an unstructured format. It is complex to analyze unstructured data and draw meaningful influences, but insurance companies are heavily investing in technologies that help collect this data, analyze it in real-time to understand consumers sentiments, and take appropriate actions. Some companies are crowdsourcing ideas from these channels and designing new products.
Insurance companies are also using a technology called telematics, where a device is installed in insured vehicles and data is collected about the way a customer drives. This vast amount of data is used in arriving at customized pricing for the customer. This is a unique concept, used by various companies in several countries and gaining popularity, where a good driver is rewarded with lower premium, whereas a not-so-good driver pays a relatively higher premium. In this process, the device installed in the vehicle continuously sends the data to insurance companies’ servers and complex algorithms analyze the driving patterns. Similar monitoring of data, ie, sensor data offers huge opportunity for business, like recommendation to prevent larger damages, better planning of resources (claim handling), early detection, and underwriting excellence, etc.