Data Analytics Is Changing The Insurance Industry

Several years of accelerating investment in data and data analytics are transforming the insurance industry. Data analysis has always been one of the historical pillars of insurance. Actuaries have used mathematical models to predict property loss and damage for centuries.

When they sell policies, insurers collect large data-sets about their customers that are updated when those customers make a claim. In recent years, as insurers have sought to become more relevant to their customers and more efficient, they have realised the strategic importance of their data investments. They want to harness data analytics to improve customer experience significantly, whilst cutting claims handling time and costs, and eliminating fraud.

Leveraging advanced analytics, and then integrating those results into their business processes needs to be an integral part of every insurer’s strategy.

Manually spotting troublesome claims early is challenging; working out strategies to mitigate the risk once identified is tougher still. The information needs to be delivered in a timely fashion, preferably instantaneously, into the natural workflow of the adjuster, possibly with a notification to the supervisor or large loss unit. 

The information delivered needs to not just raise an alert, but to explain the attributes which support the risk level, and propose a solution or work plan for the adjuster. This process should repeat itself in real-time as underlying data changes are made to the claim file, particularly for long-tail lines such as bodily injury.

Insurers are also turning to external data sources and adding more information about a claimant or injured party, such as identity verification or social media data. However, there are limits and barriers to just adding external data points.
Putting machine learning into how data is collected and analysed will help considerably in how insurers become more data-led and driven businesses.

There are some great examples of how insurers are using smarter predictive analytics to fast-track claims and process them with little to no human intervention. 

  • A company called We Predict uses predictive analytics to enable vehicle manufacturers and suppliers to manage the frequency and cost of malfunctions for vehicles under warranty. 
  • US insurer Esurance has taken to using predictive analytics as a means to skip adjuster inspections on motor claims related to major extreme weather events like 2017’s Hurricane Harvey.

The other data analytics issue confronting insurers is that actuarial science has limits when used to predict new categories of 21st century risks like cyber, food safety or complex supply chain disruption.  Helping businesses and individuals manage these risks offers huge potential rewards for the industry. Already global cyber premiums are growing at 30% per year with less than 15% penetration in the US and less 1% penetration worldwide.

Until recently insurers have not had the tools necessary to understand or price these risks accurately. There has just not been the data and loss experience for conventional modelling of these emerging categories of risk. While there are hundred-plus years of data about extreme weather, this is simply not the case for cyber-attacks, for example.

These new insurable risks have very different patterns and connections from risks to vehicles and property. For example, cyber risks are conjoined not by being in the same building or on the same flood plain, but by patterns of software usage, network connectivity, and human error

Even for well-understood risks, old assumptions may no longer apply. Indeed, the future may not be like the past. For example, changes in technology (semi-autonomous vehicles) and human behaviour (distracted driving) have already affected losses and their resulting claims in the familiar, well-studied area of personal car insurance.

How insurers will work with data in new ways is by embracing new models of technology, like Internet-scale “data listening” that aggregates, cleanses, and updates petabytes of data to build risk models in, for example, cyber. 

The data that is co-related might span public and proprietary sources about network presence, connected devices and control systems, and semantic content such as job boards and news reports of ISP outages and data breaches.
Ultimately, the industry is moving towards applying machine learning, natural language processing, and other modelling techniques to their core and third-party data in support of both operational and risk analytics. 

This ranges from underwriting tools for evaluating and pricing risk through the scores used to making better operational decisions in service and claims after those risks become insured.

Information-Age:       Image: Nick Youngson 

You Might Also Read: 

Will AI Make Data Analytics Jobs Obsolete?:

Cyber Insurance Risks Are Moving Too Fast For Underwriters:

 

 

 

 

« WannaCry Has Not Gone Away
Mueller Reports On Russian Interference »

CyberSecurity Jobsite
Perimeter 81

Directory of Suppliers

ZenGRC

ZenGRC

ZenGRC - the first, easy-to-use, enterprise-grade information security solution for compliance and risk management - offers businesses efficient control tracking, testing, and enforcement.

Practice Labs

Practice Labs

Practice Labs is an IT competency hub, where live-lab environments give access to real equipment for hands-on practice of essential cybersecurity skills.

BackupVault

BackupVault

BackupVault is a leading provider of automatic cloud backup and critical data protection against ransomware, insider attacks and hackers for businesses and organisations worldwide.

Syxsense

Syxsense

Syxsense brings together endpoint management and security for greater efficiency and collaboration between IT management and security teams.

CSI Consulting Services

CSI Consulting Services

Get Advice From The Experts: * Training * Penetration Testing * Data Governance * GDPR Compliance. Connecting you to the best in the business.

CyberOwl

CyberOwl

CyberOwl builds on cutting-edge research and combines decades of experience in developing, securing and operating large distributed systems.

Blue Lights Digital

Blue Lights Digital

Blue Lights Digital have developed a range of platforms to support digital investigations, as well as providing continued support and education for investigations professionals.

Cybertech

Cybertech

Cybertech Conference & Exhibition presents commercial problem solving strategies and solutions for the global cyber threat that meet the diverse challenges for a wide range of sectors.

Bavarian IT Security Cluster

Bavarian IT Security Cluster

The Bavarian IT Security Cluster works to build regional IT security competencies and increase the competitiveness and market opportunities of its member companies.

Government CSIRT - Chile

Government CSIRT - Chile

Government CSIRT is the Computer Security Incident Response Team for State networks and government cyberspace in Chile.

Celerium

Celerium

Celerium transforms cyber defense for both companies and industry sectors by leveraging cyber threat intelligence to defend against cyber threats and attacks.

Sky Republic

Sky Republic

Sky Republic offers a Smart Contract Platform to integrate and synchronize business networks beyond EDI and API.

SterlingRisk Programs

SterlingRisk Programs

SterlingRisk’s Cyber practice brings experience working with a wide array of clients across a broad spectrum of industries.

Ultra Electronics

Ultra Electronics

Ultra specialises in providing application-engineered bespoke solutions. We focus on mission critical and intelligent systems in the defence, security, critical detection & control markets.

Analygence

Analygence

ANALYGENCE is your trusted partner for mission support, cyber solutions, and management services.

NetCentrics

NetCentrics

NetCentrics leverages an innovative, agile, ‘what’s-next’ approach to our customers’ IT and cyber challenges.

LastPass

LastPass

LastPass provides award-winning password and identity management solutions that are convenient, effortless, and easy to manage.

Purple Team

Purple Team

Purple Team is an expert cybersecurity and managed security service provider focused on arming your IT infrastructure with both red team and blue team services.

Fairdinkum Consulting

Fairdinkum Consulting

Fairdinkum is a leading full-service IT consulting firm with more than two decades of experience in the industry.

Synersoft BLACKbox

Synersoft BLACKbox

Synersoft, the maker of path-breaking and disruptive technology for SMEs, now branded as BLACKbox, is an incubated and invested portfolio company of CIIE - IIM-Ahmedabad.

P3M Works

P3M Works

P3M Works delivers Cyber Security and Digital Transformation projects across both private and public sector clients.