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Big Challenges Ahead With Big Data Adoption In Insurance


“Big Data Analytics is a strong weapon to create very sustainable competitive advantage for insurance players and therefore help them increase their market share”. This was shared by Mercer Principal, EH&B Technology Leader, Sophia Van while speaking to Big Community ahead of the 2nd Asia Conference on Big Data & Analytics for Insurance held in Singapore.

Recent advancements in technology have pushed the industry out of their comfort zone to think of new ways to look at keeping abreast with the times. Sophia believes the change in landscape due to the many advancements such as driverless cars which would mean the risk would change hands to the manufacturer. This will encourage the big players will have to realign their infrastructure to accommodate this trend.

Sophia Van Mercer

“Big data will help innovators with the underwriting because the technology is changing the whole risk landscape. Insurers will need to innovate their underwriting capabilities in order to understand the new changing landscape”.

Some of the areas Sophia says will reflect the most changes as mentioned earlier, is when risk changes hands making cars a product liability of car manufacturers. Some risks may shrink with better mitigation and prevention technology such as medical field with better medical facilities and behavioural modification with the assistance of wearables. There are also risks that will evolve significantly in cybersecurity.

“To be prepared to face these changes, insurers will definitely need to improve their understanding of risk with the help of Big Data Analytics. New data tools will become the weapon of choice,” she clarified.

With the vast field of insurers available, those who are quick to incorporate the data analytics into their working models will be at the most advantage. By being at the forefront in leading the innovations of the technology, they will be better equipped at gaining a competitive advantage.

“Because technology is transforming the way insurance is underwritten, the winners will be the ones who can understand in-depth about the customer needs. With the help of Big Data and analytics, insurers can use the insights to continuously engage with customers, throughout their life journey. The analytics will also be an imperative tool to help them build disruptive business models and disruptive product innovations such as Usage-based Insurance products,” she says adding that UBI would not be feasible without Big Data and analytics.

However, the current atmosphere surrounding the industry is whether it is the right time to jump in or if it is better to wait it out. If they wait, then in the next 2 years when they do jump in, will it be too late?

“For analytics capabilities to be adequate, it requires time to build up. You can’t build it up over-night. I have seen insurer incumbents who are headed in the right direction. They have set up infrastructures such as innovation labs and data labs, that are bold steps and puts them in good shape to grab hold of this opportunity,” she added.

One important aspect in considering BDA, in order to mitigate security breaches, is for it to be handled in-house. Clients need reassurances that their confidential data is secure. This is why it is important for insurers to start building their infrastructure as soon as possible and not wait to be sure because by the time they are sure, they will no longer be relevant.

Data sources are increasing exponentially. From wearables to geospatial telemetrics, the data is coming in hard and fast. For Sophia, it’s not important how much of data is collected as opposed to how the data is made to connect to bring insight.

“With the emergence of massive amounts of data, the majority of which are in unstructured form, it will not be easy to extract the insights. Organisations are struggling to acquire the right tools, the right skills, the right talents and at the right cost”.

The task gets even more difficult once you consider having to insert that information into a traditional actuary model. This would require a big paradigm shift in the mindsets of all layers of management and staff within the organisation.

“It requires courage to experiment and innovate in this space going from the top to the bottom”, she proposed, adding that these are the main challenges that insurers are facing in moving forward with their technological adoption that will bring them to the next level in customer satisfaction.