Small and big data handling need careful attention

In the last session before the final demos of the first day of InsurTech Rising this afternoon, HCL Technologies iCoach and senior sales director Santosh Kumar presented a leadership briefing to introduce the next panel.

In a session entitled "Performing in the connected world – becoming a data-driven insurer", Santosh Kumar introduced a panel that examined the challenges and solutions to recording and analysing unprecedented and fast-growing quantities of data by insurance companies.

Addressing the emergence of connected consumer technologies and the challenges this presents to insurers, he underlined problems with data and some of the opportunities ahead of the InsurTech demos.

Looking at recent changes in technology, citing a projected 100bn connected devices by 2025, and looking at the related challenges to insurance, he asked: how do you manage such a large quantity of data? It poses technology challenges, commercial challenges and problems related to the development of new business models, he warned.

“In InsureTech these questions present big opportunities to startups to solve the big problems of the legacy insurance companies,” he said.

Speaking from the panel, Bupa global chief actuary and director of data analytics Dimitri Velmachos said: “The impact of data is playing a big role, but the big challenge is the gap in expectation between insurer and customer.” The customer wants simplicity, transparency and insurance cover to meet his particular needs, he said.

He gave an example of a portal that can be offered to customers with common interests such as a football team. “By creating this pool, you can assume a specific risk profile, and offer more competitive pricing.”

Swiss Re MD digital analytics catalysts Daniel Ryan said the problems relating to data analysis was exacerbated by the fact that the way insurers interact with the policyholder is one that that meets with compliance rules, and not in the way the consumer assumes. “What resonates with the policyholder is that if you have a better risk, and if the insurer just offers a lower premium, then the insurer is only operating in one dimension. But by offering more you give the impression you understand the customer and there follows a less adversarial relationship.”

AXA head of dynamic underwriting and pricing Barry Hawkins said that insurance was still a traditional market and that in car and van insurance, price is still the driving force. “When the customer chooses a policy with higher excess this can give rise to problems at claims time, and they don’t necessarily understand that,” he said.

“Business continuity cover is testament to how we care. We want to give the broker all the tools he needs to get the cover right in the first place. It is our duty to convey the importance of insurance to the consumer at large. There are lots of uninsured businesses out there, and data can tell you where the gaps are.”

Hawkins added a point that resonated with the rest of the panel, which was that: “Insurers should sort out small data before piling in loads of big data. Where you have a lot of big data, the challenge is processing it. We use different approaches such as non-linear modelling. But the other challenge is the regulator, so we have to be very careful,” he warned.

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