The insurance industry is in a state of rapid change as the combined forces of 4IR technologies and the disruptive impact of the pandemic transform the insurance landscape.
Across all industries, the accelerating adoption of new technologies is creating vast amounts of data that can be mined, turned into insights and used to improve decision-making, optimise process efficiency and unlock new revenue streams or business models.
For insurers, this creates an enormous opportunity to build systems and processes that can tap into these new data streams. A comprehensive data strategy that is driven by business outcomes and focuses on turning both internal and external data sources into actionable insights can provide a welcome boost to insurers following years of elevated risk and widespread disruption.
Data strategies could unlock untold benefits
Effective use of the growing number of data sources at the disposal of insurance companies can introduce new opportunities for improving customer experiences and driving greater efficiency across the business.
For example, an insurer could integrate with the data produced by a logistics customer, utilising driver behaviour data from telematics devices as well as location data from GPS devices to more accurately gauge risk and optimise the insurance policy accordingly.
Similarly, a data-driven approach to the customer experience could see insurers tap into a wealth of third-party or additional data from sources that range from social media and loyalty programmes to sensors feeding behavioural data into a central system.
Based on these combined data sets, insurers could reward good behaviour and encourage safe conduct, thereby driving down claims and reducing risk.
This can contribute to the insurer's profitability and stability while also improving customer retention through the delivery of positive customer experiences.
Key data priorities for insurers
Following the catastrophic impact of the pandemic on insurers' risk strategies and profitability, any new innovation that could improve stability, add predictability, enhance the customer experience and unlock new revenue opportunities should be welcomed.
To start, insurers should consider three data priorities, namely:
1. Improving data collection
By the very nature of the type of business insurers operate, most sit with vast amounts of customer data that are used to manage risk and maintain profitability.
However, the explosion of third-party data sources thanks to the growing proliferation of data-generating devices – IOT, mobile phones, social media and more – has created oceans of potentially valuable data for insurance companies.
A top priority for insurers is to improve the collection of relevant data from first- and third-party sources. The task is not simply to start ingesting all data from all available sources – this will reduce the usefulness of data and add complexity and delays to generating data insights.
Instead, insurers should focus on identifying high-value data sources and building systems and processes that can seamlessly ingest and process that data.
2. Boosting data availability
Data is meaningless unless it can be accessed, used to derive insights and applied in decision-making to improve the quality of outcomes.
For insurers, data availability has an added dimension.
The growing importance of customer experience in consumers' decision-making process means companies have to prioritise this vital element to their business strategy. For insurers, this means using data to tailor offerings to individual customers based on a range of first- and third-party data sources, as well as making policy data available as soon as possible.
Consumers no longer want to wait for brokers to send updated policy information – their data needs to be accessible anywhere, anytime.
This puts data availability at the forefront of how insurers interact with customers. Add the complexities introduced through legislation such as POPIA – which adds several demands to how customer data is collected, managed, stored and processed, and it's never been more important that insurers streamline their data availability efforts.
Improved data sharing can ease the burden of data governance and security while also reducing data analytics costs. Gartner data found that companies that increased data sharing were 1.7 times better at demonstrating value to data and analytics stakeholders and 3.5 times more likely to succeed at data monetisation.
3. Empowering data consumers
The ultimate goal of data strategies is to shift the business to a state where decisions are made based on accurate, up-to-date and verified data that can bring the business strategy to life.
However, even the best data strategies fail when end-users, those who are meant to utilise that data to improve their job functions or drive positive outcomes for the business and its customers, can't or won't use that data.
Internally, insurers need to implement extensive change management to ensure every employee is empowered to use new data tools and insights in their day-to-day planning and work activities. This will support the broader data strategy and ensure outcomes drive the achievement of broader business objectives.
Externally, insurers need to develop compelling use cases for customers to access and use data, for example, through mobile apps that provide real-time tracking of driving behaviour and rewards safe driving with tailored benefits.
By empowering internal and external data consumers, insurers can boost the ROI from data initiatives and gain valuable insights into the types of data use cases to further explore in future data initiatives.
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