Of Special Interest


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5th January 2014

Big Data-a challenge but an opportunity to differentiate

As an insurance business analyst writing and talking about strategic market and IT trends for over thirty years, I have always placed the business issues first before building a bridge to what IT can do to help players achieve sustained differentiation. Big Data is a major challenge because it is owned as a phrase by the IT community which makes it complex for insurance business people to fully comprehend its potential impact. One needs to look at Big Data’s role in the context of the key factors influencing the insurance markets-for example, more globalisation, increased regulatory demands, a continuing low interest environment pressurising the need for improved combined ratios, and the growth of consumer power through online self-service and the wider spread of Social Media.
The sophistication of analytics in the insurance market has grown apace in the last few years. It does not seem long ago that it was called “management information” by insurance software suppliers-it has progressed through “business intelligence” and from financial and claims ratio/reserve assessment to embrace predictive applications. However, analytics has mainly been interpreted by business as figures–based. Big Data implies the need to analyse a wider range of “structured” and “unstructured” information, increasingly available from Social Media sites and from specialist third parties to supplement and complement internal company information. Third party services range from credit checking, geographical information systems, modelling for underwriting, investment, and capital assessment, and fraud detection, to market and IT trends-to enable quicker decision-making by a wider range of management and staff.
Whilst the potential for insurers to improve customer knowledge through Social Media is in its infancy, some face the problem that they have still not achieved a single view of the customer across multiple-channels, and the possibility of an increase in reputational risk-so there could certainly be differentiation opportunities. In the Big Data era, the key to successful third party services is to provide a simple interface to internal business analytics and administration systems. For example. a market and IT trends database needs to offer global and local intelligence, key coverage of increasingly regulatory changes, selective research and survey summaries, an aid to competitor assessment, and incorporate the penetration of the range of IT solutions-it should be capable of being easily accessible 24X7 on a “self-search” basis by key business personnel.