With big data increasingly gaining momentum, insurance companies are now using data analytics to improve customer experience. However, the question is whether insurers are exploring this technology to the fullest. To ensure that the insurers are not left behind, insurance regulators have been trying their best to facilitate the adoption by adopting sandboxing of application tests. By taking the role as the leader in this process, innovation is being spurred in the insurance space.
Although some insurance companies have begun using new technologies, many are still sitting on a pile of data that they are not using to the maximum for best results. The main reason is that not all data is digitized while some data that has been digitized is spread across different systems and simply are not integrated. The credibility of third-party data is also one of the challenges to the digitization and in the end, is a problem in deploying big data in the insurance sector. Some insurance firms have begun implementing big data and analytics in their operations, however their implementation is still largely limited to marketing campaigns. As such, there is still room for efficient deployment of big data in decision making facet among other aspects such as servicing claims and sales, product development, assessment of risk, pricing, fraud detection and in management.
As competition in the insurance industry continues heating up, the challenge is innovating and discovering ways to serve the changing needs of the customer. However, with big data and sandboxing, innovative experiments can be tryied out through partnerships to help solve known problems. Both the incumbents and the newcomers in the industry are developing new products that require large amounts of data for assessing, selecting, predicting, and preventing risks which in the previous years were seen as uninsurable. Going into the future, access to data and the ability to use it to gain insight will be a crucial factor for competitiveness in the insurance industry.
The presence of big data analytics is enabling insurers to monitor distribution channels, analyze the behavior of the customer, and customize products to meet their needs. With the diverse nature of markets and different segments of consumers, a one-size-fits-all approach to serving the population will fail. However, with proper data and analytics in place, varying needs of customers can be discovered and addressed. For example, insurance companies can easily develop products and test them in a controlled environment. Knowledge obtained from data that’s been collected can be leveraged to gain a competitive edge in different areas; one of them being that it allows insurers to develop and market products which are needed in new markets.