Tapping the Insurance data goldmine will take a leadership shift
Following InsurTech Rising, Murli Buluswar, Senior Executive Advisor at The Boston Consulting Group (BCG) discusses his key take-aways from the event and looks into what impact data will have on the industry.
I took part in a panel discussion at InsurTech Rising in London this week talking about the Insurance industry’s current approach to data & analytics and what the future could look like with a fundamental shift in how leaders approach this rich source of information.
Data is revolutionising all aspects of the market. Nearly every facet of insurance can potentially benefit - from day-to-day operations, to claims-analysis, and underwriting. No large carrier has a data deficit, but they do need to be willing to think about how that data could fundamentally change how the business operates rather than simply using data to improve what they are already doing.
Where most incumbents are going wrong is an attitude of incrementalism in their transformation. Rather than change their legacy systems piece-by-piece, they should build a distinct, parallel pipeline to circumvent their current network. The combination of old and new data systems (normalised on a new scale) will grant insurance firms access to unprecedented amounts of data that will revolutionise the way they work.
No large carrier has a data deficit, but they do need to be willing to think about how that data could fundamentally change how the business operate.
This data could be used at a truly elemental level to increase efficiency and accuracy of day-to-day decisions. Take the annual reserves analysis run by actuaries – why can’t the insurer be looking day-by-day at claims paid, customers lost, customers won etc? Looking at the data at this level and streamlining to become a daily process, could create real-time updates about the direction of the business with unparalleled accuracy.
Perhaps the biggest opportunity data provides is the ability to answer questions that the industry has never even asked. Most CEO’s claim to be making serious investments in this space, but lack a cohesive vision for how the new capability will affect their core strategy in a few years’ time.
It can be daunting to navigate such vast quantities of data. The trick is not to start with the data but with the question. Like many mature industries, insurers have lost some of their sense of curiosity. But it is by this reshaping of core processes, that we debunk the paradigms of yesterday and enter a brave new tomorrow. In this sense, the challenge is cultural rather than technological.
Perhaps the biggest opportunity data provides is the ability to answer questions that the industry has never even asked.
In the next few years there will be some dramatic improvements in data-based insurance technology. But this ultimately only leads to small improvements around the edges of the business unless industry leadership thinks differently about what data can achieve for the business and creates the right organisational structure and approach so that data initiatives no longer sit in vertical silos, but run through the business.
As one fellow panelist commented: a large tech player or other will come and eat your lunch. Whether you let them do that is a choice. Data would seem to be the single most powerful weapon in the Insurance industry’s arsenal if it can learn how to use it to its full potential.
