Big Data increasingly matters for life and health insurers because it enables companies to access more information about customers, and in turn, offers the potential for cheaper premiums and rewards.
A white paper published by Timetric’s Insurance Intelligence Center, The Rise of Big Data in Insurance, explains that insurers are analyzing already collected data, aiming to create profiles of customers.
The next step is to identify customers looking for particular lines of insurance by tracking internet searches and social media, should the latter be legalized.
Admiral was recently blocked from using user data on Facebook to price motor premiums, but as the white paper notes attempts such as this are surely just the start of a changing landscape.
Big Data technology can be used to design and accommodate various data platforms and data models, and provide insightful, actionable analysis on a diverse range of data sets.
Data sets other than traditional data, such as demographics, can add to an insurer’s ability to assess underlying risk more effectively.
As well as enhancing core business functions, Big Data can therefore be used to achieve operational efficiency, and devise strategies to improve customer acquisition and retention through effective communication and cross-selling.
Big Data’s impact on health sector
The Timetric white paper says health sector is where big data’s impact is most evident, with wearable technology increasingly used by large insurers, which offer cheaper premiums, reward schemes and health benefits in exchange for personal data.
Leading the way in the UK is Vitality Health, which offers discounted Fitbit devices, cheaper premiums and rewards for customers reaching a target of 10,000 steps per day. Statista has forecast that the wearable device market value will value US$12.7bn and 13.45m devices will be shipped worldwide in 2018.
The white paper says: “While wearables are designed to monitor fitness and promote healthy lifestyles, the next step is in preventive care, where insurance becomes more of a service. Currently there are many private healthcare companies which, generally via an app, offer around- the-clock access to doctors.
“The more access to consumer data insurers are permitted, the deeper this can develop – from body sensors, exterior monitors, and workout machines, to monitoring lifestyle through social media posts.”
Big data will transform the insurance industry. Key to this will be the way the data is analysed. Data analytics ensures data really becomes valuable.