“If there is Big Data, is there Little Data?” – Philosoraptor
Ok, so there is no such thing as a velociraptor that is also a philosopher and is called a philosoraptor. That’s just an Internet meme that has been going viral for some time (a meme is a concept that spreads rapidly from person to person, usually through social media and other Internet forums like Reddit or 4chan, and it is distinguished by its creativity). However, big data is a real concept that’s disrupting businesses everywhere, the life and health insurance industries included.
But what is big data? How do we as advisors or businesses use it? Will it make your life easier, as most technologies claim to do? And how can you get started?
We consulted with experts in this matter, who are also completely immersed in the insurance industry, to answer these and other questions. Here is their advice on big data.
1) What is big data?
According to Jeffrey J. Hogan, Northeast regional manager of Rogers Benefit Group in Connecticut, “big data is the common denominator of our value proposition. Big data is any and all information that will help a plan sponsor determine how to mitigate risks on his/her plan. This includes traditional reporting from employers and more. We also typically include preventive usage reporting as part of our big data dump,” Hogan explained in a brief interview with LifeHealthPro.com.
Meanwhile, another industry expert defined big data as a “term adopted by marketers and organizations that encompasses the idea that client information can be used to refine their own marketing or sales buying habits. Big data analytics will show and prove that certain demographics buy or respond to marketing differently than others, and allow an organization not to waste efforts on those that statistically will not convert,” said Nic West, director at PinneyInsurance.com, a national insurance brokerage that specializes in servicing the needs of the tech savvy, next generation agent.
And while this is all very exciting for some, others are mildly skeptical about the transformative power of this technology. In a recent press release, Strategy Meets Action (SMA), an insurance strategic advisory firm, released two new research reports on big data, “Big Data in Insurance: Insurer Priorities, Projects, and Investment Plans for 2014 and Beyond“ and “Big Data in Insurance: Emerging Trends in Organization and Technology.”
The lead author of one of the reports, Mark Breading, says that big data may be “simultaneously over-hyped and underestimated.” It won’t change the insurance world overnight, “but the potential is enormous and benefits are already being reaped,” said Breading, also an SMA partner.
2) How to use big data?
In West’s case, he uses big data analytics to market and sell. “Blast marketing is a thing of the past. Now, it is all about finding the message that fits exactly the interests of the recipient by using data analytics from previous attempts to refine the message and audience,” he said.
The claim for more efficiency in all industries is being driven in part by new technology, and big data is definitely behind it. According to Hogan, the Patient Protection and Affordable Care Act (PPACA) has created incentives for employers who sponsor health plans to figure out how to use data to coordinate and manage their health plans effectively. “Intelligent agents, brokers and consultants now are partnering directly with the C-Suite to teach them both how to manage risk and how to strategically design their plans and incentives to change behavior among members. You can’t manage or even accept risk unless you have data to inform your every move,” explained Hogan in an interview with LifeHealthPro.com.He says that big data will emancipate and revolutionize the health care marketplace.
And there are other ways that companies are using big data. More than pulling reports related to their groups, the health care industry, for example, uses it for gathering information such as detailed utilization information including prescription usage by tier, preventive usage, claims stratification, premium and claims by month, etc., according to Hogan.
The goal of big data is to make the industry more efficient, lowering risk, costs and providing better access to information, while also fueling innovation. “Suddenly, big data is driving a demand for the best, most efficient, nimblest payers and providers. It’s so incredibly exciting! The health care marketplace is de-centralizing and the various players including plan sponsors, payers and providers are taking on and managing their own risk,” Hogan said.
And it seems that more than just providing consumer problems, big data is also creating a demand for better, more informed and more competent agents and brokers, he added. “Those that are stuck in the mud will — and are — losing out. Big data creates tremendous opportunity for strategists to become trusted advisors,” the benefits expert cautioned.
With 25 percent of insurers investing in big data projects in 2014, a dramatic increase from 9 percent in 2012, according to SMA’s report, it’s no surprise that you’ll be hearing a lot more about it.