Three tips for innovating with big data
How smart insurers are moving past the pilot phase to get serious with data
by Mark Breading, Chief Research Officer, Strategy Meets Action
Insurers are increasingly applying big data solutions to drive innovative thinking on everything from calculating risk to attracting new customers. A recent survey we commissioned highlights the many data sources and means that insurers are eager to employ.
By the end of 2016, for instance, 25 percent of life and annuity insurers say they’ll be tapping into data from wearable devices to inform their underwriting operation. Property and casualty insurers say that in that same time period they will be adopting social media as a new data source to better understand trends and behavior patterns for their customer acquisition efforts.
Companies need visionaries, big thinkers, and subject matter experts in key business areas to ask the 'what if' questions.
But saying that you will do something, and actually executing, are very different. We think the insurers that will achieve the most with big data will do these three things:
- Ask bigger and bolder questions: Recognize the types of business problems that might be addressed and how they can contribute to differentiation strategies. This does not require you to be an expert in the specific technologies, but it does require creative, outside-the-box thinking. Are there options to do catastrophe modeling in hours with bigger data sets vs. days with smaller ones? Can you spot new product opportunities based on posts, tweets, likes and favorites?
- Pay attention to talent: It takes a combination of business and technology experts to understand where -- and how -- big data can be applied, and how to interpret and act on it. While analytics officers, data scientists, and modeling experts form the backbone of the team, it’s not enough. Companies need visionaries, big thinkers, and subject matter experts in key business areas to ask the “what if” questions.
- Take a different look at technology: Solutions that require years to get off the ground, special silos of data, lots of IT help or extensive use of outside consultants and companies are being pushed aside. Flexible solutions that allow for experimentation are critical. Organizations need realize that failures will occur. But agile organizations that experiment will fail faster, often leading to quicker success.
Your competitors are increasingly working with big data to look for game-changing approaches to attract and retain customers and understand risk. While some big data driven approaches are getting a lot of attention (telematics) there are others that could be just as critical to the bottom line if executed properly (quicker, more flexible catastrophe modeling). Our survey suggests insurance executives are eager to start the process.
Mark Breading is Partner and Chief Research Officer at Strategy Meets Action (SMA), a strategic advisory firm that helps insurance companies modernize, optimize, and innovate through the use of emerging technologies.