The concept of “big data” and ways to leverage it has not been lost on the insurance industry. Although other sectors may be ahead, the risk and insurance industry actually was an early adopter of data, in particular its foundation based on the ”law of large numbers” and utilization of actuarial science.
Indeed, where would underwriters be today without their arguable mastery of big data?
Consider the volumes of loss, construction, fire protection and historical weather data that are routinely analyzed by property underwriters; workplace claim and injury data accumulated and scrutinized by workers’ compensation carriers; aggregated exposures tracked and analyzed by reinsurers with respect to catastrophic events; the development of mortality and morbidity tables used by the life/health companies, as just a few examples. And you get the picture of an industry that in many ways has been at the forefront in its ability to capture, manipulate and utilize vast amounts of data — big data — for a variety of its critical applications.
However, the insurance industry may still be in its infancy with respect to its ability to gather and utilize all the vitally relevant data out there. Consider the incredible amounts of data the industry accumulates through the hundreds of thousands of daily transactions, but doesn’t necessarily capture centrally and utilize.
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This is a critical aspect of big data that the insurance industry generally has been missing — and where the industry as a whole now trails other sectors. Success in accumulating and analyzing data holds the keys to greater efficiency, accelerated product development, targeted marketing and improved client service.
Meanwhile, on the client side — the ultimate consumers of insurance and risk management services — expectations are rising. Most industries are finding ways to capture and use information about their company performance (including sales, marketing, distribution and operations), and are developing a sharper focus on analytical tools to drive performance improvements across their organization. Increasingly, clients are coming to expect their advisors (brokers and agents) to “speak their language” and provide similar types of analytic capabilities.
Accordingly, the trends suggest that the insurance industry needs to strengthen its ability to capture, analyze and act on big data that exist throughout its distribution channel. In their daily interactions with clients, agents and brokers accumulate tremendous amounts of data with very few examples of brokers utilizing the data for internal and external benefits.