Insurance companies have been sitting on data for years - now they can actually apply it
Insurers have barely begun to realize the potential that big data offers when it comes to managing every end of the business, from conducting back office functions in an instant to uncovering a new universe of risk factors. Today an insurance company can use artificial intelligence to analyze the millions of data points that go into reviewing a claim or detecting fraud, and perform the process so quickly that a customer can report an auto accident by smart phone app and receive a payout within minutes or even seconds. But rapid claim processing is just the beginning.
As available data and AI capabilities grow, insurers will also be able to use big data analytics to determine better ways of mitigating risk. For example, they might use data gathered from sensors to assess how cars can be made more accident-proof, or to alert a homeowner about a leak or other hazard. There will be challenges to consider in determining who owns such data, as well as the value and accuracy of the data. But AI-driven analysis should lead to a far more efficient and insightful insurance industry, with lower payout costs for many incidents, a greater knowledge of preventive mechanisms, and more tailored policies that are priced by a customer’s individual risk profile rather than by proxy measurements such as age and marital status.
John Standish, Co-Founder & Chief Analytics Officer of Infinilytics, spoke with Oliver Wyman at InsureTech Connect 2017 about the many untapped and unimagined ways that big data analytics can transform the industry.