Follow Datanami:
April 15, 2014

Insurers Begin to Embrace Big Data

George Leopold

Insurers and other managers of risk are increasingly relying on big data techniques to get a handle on internal customer data and trends as well as third-party data that can be leveraged to guide business strategies and investments.

Indeed, insurance industry executives from companies like AIG, Chubb, Travelers and others suggested at a recent seminar that insurers could ultimately prove to be one of the biggest beneficiaries of applying big data techniques to data management.

Executives also said big data could help insurers manage risks in markets where factors such as extreme weather increase their exposure.

Insurers are following the lead of others industries by attempting to capture and analyze growing amounts of data generated by customers using mobile devices. The thinking goes that insurance data managers will at last be able to glean information on industry trends based on consumer behavior.

Despite the growing list of big data applications, the insurance industry has been relatively slow to embrace big data or invest in underlying technologies. One of the biggest gaps has been finding better ways to reach customers via mobile devices.

As insurers gradually ramp up big data analytics, observer note that they can leverage consumer trends to better manage risks. Said one AIG executive at the seminar: “To use that data, to mine it, to look at what risk [is] out there for a commercial or individual client is all about what could happen and what the drivers are that could make a risk realized. Those are things we are trying to figure out.”

Another issue is determining the information needs of financial decision makers. For insurers increasingly concerned about the growing risk exposure associated with extreme weather, much more granular information is needed. That includes climate data on flood and storm surge risk. Insurers can also be exposed to greater financial risk –even legal liability — through weather-related disruptions of supply chains.

Hence, insurance and other financial decision makers need more structured data, user-friendly databases and better analytical tools.

Rebecca Ranich, director of federal energy and resource management for Deloitte Consulting, told a recent conference on climate data needs that growing uncertainty stemming from extreme weather events creates risks in the form of higher costs for insurers and related financial services providers. Still, big data also creates opportunities. For example, Ranich said, investment in big data infrastructure offers a “breakthrough opportunity” to limit the effects of extreme weather while spurring economic development.

Managing risk through data analytics has resulted in raising the corporate profile of internal “data brokers” to the level of “chief risk officers,” Ranich added.

Hence, risk management and analyzing consumer behavior based on data from ubiquitous mobile devices is prompting more insurers and financial services firms to embrace big data.

Related Items:

How Fast Data is Driving Analytics on the IoT Superhighway

Survey Finds Open Data Boosting U.S. Economy

Does Silicon Valley Have the Answer to Living Healthier?

Do NOT follow this link or you will be banned from the site!
Share This