In recent years, the insurance and financial industries have introduced a variety of systems that allow for “new data” to be analyzed, offering insights to insurers as they underwrite, design policy, and adjust claims. So, what is this new data and how can insurers use it to their benefit?
A recent Celent study dove into this topic polling top insurers and technology firms on their use of data solutions. For the study, new data was defined as data which has not been in common and general usage by insurers. Celent asked firms about these the products in use, how they are being implemented, where they are being used, and if the technology offers an analytic solution.
The findings varied but had a common resolution: new data can be used to improve a variety of insurance tasks. Below are a few uses highlighted throughout the study:
- Underwriting: An underwriting score for a home insurance policy can be more accurate based on risk. If the data shows the location is less likely to encounter a natural disaster, for instance, the policy price will decrease.
- Marketing: Using social media data, campaigns can be targeted and geofenced to be showcased to the most desirable policyholders.
- Compliance and Risk Management: Data helps insurers determine risk by examining the characteristics of a portfolio and helps them make an educated decision on price and policy.
“How does an insurer determine if a particular kind of new data will provide value in pricing, underwriting, claims, or any other insurance process? The simple answer is by determining whether including that data in pricing algorithms, underwriting scores, or certain claims adjustment processes, such as adjuster assignment, results in lift,” said the study.
By implementing new data solutions, insurers are seeing increased profitability from claims to marketing. Before settling on a solution, insurers should test different options and compare data analytics, proofs of concept, and ROI.
To learn more about solutions providing insurers with new data analytics, click here.