Clients the big winners as insurance data usage booms

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A company that doesn’t see data as one of its most important organisational assets is not gearing up correctly for the future – and the ability to create, store, manipulate and enrich data to gain valuable insights will be the main differentiator for organisations in the years to come.

That’s the assessment of Dr Eugene Wessels, general manager of data analytics at insurance company King Price, who says that modern insurance companies are transforming their operations to become entirely data-centric – and it’s ultimately the clients who will be the big winners.

“Because we’re able to process vast amounts of data to gain insights into business matters in ways we’ve never been able to do previously, the ability of insurers to determine risk is evolving to a point of near perfection. This essentially results in more accurate and fair premiums– which means lower-risk clients will pay less for insurance,” says Dr Wessels.

The ultimate goal for any insurer is to be able to assess risk as accurately as possible for each individual client. Right now, insurers are doing this through a combination of technology – like better analytics engines that drive more accurate ratings, for example – and personal data that clients share with the insurer, like how often they exercise and even how they drive.

In effect, clients ‘sell’ the insurer their personal data, in exchange for lower premiums, but increasingly, personal data can only be used when the individual has given explicit consent. And that’s the downside for the insurer: more onerous data compliance legislation, like POPI and GDPR, is fundamentally changing the way that companies can gather, use, store and destroy their clients’ information.

Gathering more information also means that insurers have to deal with more data – and this tsunami of data is driving a major shift in insurance business models, to the point where insurers are becoming data companies that sell insurance, rather than insurance companies that use data, says Dr Wessels.

“That is the future of any company, regardless of how the short-term insurance landscape changes over the next 20 years. Insurers are now embedding data touchpoints in every part of their business to monitor their performance in minute detail, and will eventually use this data to train robots/machines. This will take the entire industry to the next level,” he says.

One area that many companies are already exploring – and investing in – as they look to process and interpret huge volumes of data is artificial intelligence (AI). Far from being a threat to people’s jobs, though, Dr Wessels believes AI will not replace people, but will enable them to function at a high-performance level.

But don’t just rush in and splash out on AI and big data solutions. Investing in technology alone is not going to drive innovation – it is the ability to deliver value from data that will lead to innovation, says Dr Wessels. The key for organisations is determining what technology will support the business’ data journey, and investing accordingly.

Dr Wessels has no doubt that AI will become an integral part of every aspect of insurance in the next few years. This includes lead optimisation, underwriting risk identification, claims processing and fraud identification, and engaging with clients through chatbots.

The boom in technology is also likely to drive sea-changes in the customer experience, with data-driven technologies like AI, apps and chatbots creating a range of digital-first, human-friendly services that are tailored to the exact needs of the client. Many of these technologies already exist, and will only make the purchase, claims and service experiences easier than ever for clients while providing better risk management and cost optimisation for the insurance companies themselves.

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