By: Yolanda Smit, Regional Director (Gauteng) at PBT Group
As Big Data continues to move beyond the ‘hype’ across many industries, in our experience, the insurance sector is one that still finds Big Data rather overwhelming, especially for the veterans in the industry. While some insurers are still sceptical about the value of Big Data for their business models, and don’t ‘see’ themselves as having massive amounts of data that can add real value to the business on a day-to-day basis, other, typically ‘younger’ insurers are achieving significant competitive advantage from Big Data – truly reaping the opportunity Big Data can provide to this space.
It should be noted that the value of Big Data for insurers lies hidden in various treasure-chests. The most evident driver is the rise of ‘connected’ lifestyles – resulting in customers demanding more of insurers – this includes engagement on digital platforms, expecting immediate responses and of course continuous digital interaction. This connectedness has also given rise to a more informed consumer base with people having a very strong understanding and awareness of other competitive offerings available to them. As a result of this, customers today not only want better pricing, but they also expect innovative, value-added solutions that appeal and add value to their lifestyle requirements. If an insurer is not able to deliver on this, then the customer may be more prone to changing to a service provider who can meet their needs. There is very little insurance brand loyalty anymore.
This customer-pull for digital interaction, coupled with the ongoing impact of fraud within this industry, has necessitated many insurance firms to focus their efforts on Information Strategies of digitalisation and more mature security and fraud prevention. However, as the move to digital continues to impact all sectors, Big Data should no longer be viewed as second tier to this.
Considering the current volatile economic environment, insurance businesses need to embrace their available customer data and implement the kind of IT systems that empower them to make informed decisions – based on their customer requirements as well as market trends – that will impact them from the short-term through to the long-term. Big Data platforms with sophisticated Big Data Analytics (descriptive, predictive, and prescriptive) are strong enablers that can assist in servicing clients in a fully digital mode, as well as predicting potential fraud incidents proactively with higher levels of confidence. This is achieved by augmenting Big Data platforms into the current Business Intelligence (BI) architectures of the business, which increases the organisation’s capability to process more diverse kinds of data, translating it into insights for real business value.
With this in mind, I must stress that I do not promote Big Data as a one size fits all approach and solution for all insurance information challenges. On the contrary, Big Data becomes a new strategic tool added to an existing Information Management toolbox to enable new use-cases. As many companies are currently embarking on replacing legacy platforms and systems – all while trying to roll-out more innovative and digitally based solutions in an effort to address the customer requirements in this digital age – there doesn’t seem to be sufficient innovative capacity within the organisations to effectively invest in exploring the Big Data value propositions. For many in this sector, these modern-day IT concepts do not resonate easily at a business level and the true skills to interpret and translate Big Data opportunities into business cases are still very rare, with the perception that those with the skills come at a significant price.
Big Data, however, is an opportunity that must be explored to better manage many market concerns in this space, as such fraud, solvency, insurance risk management etc., while still gaining a competitive advantage and delivering on immediate and future customer requirements. Undoubtedly, there is a lot to learn, however, the benefits and the value Big Data provides insurers are just too good to ignore. Those who actively embrace these will be the ones that become industry front-runners in this digital age.