Insurance Data Analytics

Insurance company seniors pose at Modern Insurance Magazine interview regarding data analytics

Data and analytics have the power to help us truly understand and minimise risk exposure and improve operational processes. London’s session focused on how the industry can further utilise and access advanced analytics in order to stay ahead while identifying market opportunities and creating an effective business strategy.

Trevor Lloyd-Jones kicked off our second event with the question: “Given that algorithms and advanced analytics are going to continue to become important areas of competition, how can insurers deal with the issue of skill supply not meeting the demand?” “This is a matter that is close to my heart,” explained Annarita Roscino, “over the last four years I have always had a vacancy within my team for data scientists. The insurance market is finding it hard to recruit for advanced analytics roles and identifying candidates that can actually do data science can be challenging.” Many of the table were in agreement, and while it became apparent that there is no lack of CVs, it seems that the skill sets are not up to scratch. Michael Calvert suggested that the key is about getting the right people to want to work in insurance. Insurance is often deemed to be the lesser exciting of many of the sectors, but when it comes to data and analytics there are many opportunities to get involved with. Webinars, apprenticeships and graduate programs were all examples given by the delegates, which they found to be a successful way of spreading the message while widening their net when looking for talent and the right skill sets.

Information is power – Annarita Roscino, Zurich

All data is useful – Michael Calvert, AXA Insurance (UK)

Data opportunities and challenges

The insurance industry faces a unique set of challenges in regards to data and analytics, one being the breakdown of data silos. Lloyd-Jones asked the table how the breakdown of data silos could facilitate proper sharing and use of data, and what effect this could have on the overall business. “There are many benefits to doing this but it is a very difficult process,” said Calvert, “getting all of that data into one place is time-consuming, and many people don’t have the capability, technology, or appetite to spend that amount of money without an immediate benefit.” Graeme Howard had had success in centralising data, but it was not while in the insurance industry: “By having all of the data in one location, we could generate new services extremely quickly; unfortunately it is taking time to be able to replicate that in insurance.” Governance was quickly brought into the conversation – if data is to become more available and accessible, then a stricter governance process needs to be implemented. Data protection, governance, and information security are extremely beneficial to businesses as they ensure data is consistent and trustworthy; as more insurance businesses start to rely on data analytics, it is vital that companies have enough knowledge to overcome any challenges that link to data governance.

The data scientist makes data liquid and accessible – Trevor Lloyd-Jones, LexisNexis Risk Solutions

Another challenge to overcome is the buy-in from senior leaders, but also from the entire industry. Calvert explained that many of the solutions that they are building don’t have a direct impact on the business unless they are operationalised; and if the senior leadership team don’t understand the data or the benefits, then they are usually met with resistance. Roscino believes that culture is one of the biggest barriers: “Some individuals have been doing the same job for the last thirty years and might find it difficult to change their ways. Therefore, it is our responsibility to educate those people and ensure better usage and adoption.” Another aspect is the idea of the data strategy – Howard believes that we should be talking about an overall business strategy and how data and analytics fits into that strategy, rather than being separate approaches.

What does GDPR mean for the industry?

While GDPR can be restrictive, there is an alternative approach that can enhance how analytics works for the industry. This catalyst of change has initiated further trust between the customer and the insurer that their data will be safe, but it hasn’t been a smooth process. Insurance is still seen as a grudge purchase, explained Howard, and it is hard for customers to see the benefits of sharing their data unless they make a claim, which is the worst-case scenario. Insurers should be more “out there” about the benefits they have to offer, said Roscino. “Data smooths the entire process, and equally it will help with the prevention of claims, and that is something we need to educate both our customers and colleagues on,” stated Calvert. If we can improve the connectivity and interaction between insurers and customers then the sharing of data will seem much more worthwhile.

The table then focused on external data and what insights can be gleaned from external data such as social media, multimedia, smartphones, computers, and other devices, and how can this source of behavioural data help us to understand different types of risks and consumers. Does it have predictive value and how much is device data going to be important in the future? The table agreed that it will be extremely useful, but fraud teams are likely to have more appetite and leeway using this type of data. Frederic Valluet sees the value in being able to collect data directly from the customer but explained that collecting it from other sources such as social media would be harder to justify and prove the value to the customer.

It is clear that we are moving at a faster pace than ever before, and that is down to a combination of elements, including a more customer-centric viewpoint from the industry, plus the challenge of disruptors. The more disruptors that challenge the market, the more insurers need to change the way they are thinking in order to keep up. We are facing a wave of change, but there are plenty of opportunities available with the help of data and analytics.