Blending and using data in real time ensures the right people are insured on the right basis.
In a recent Post magazine survey, a fifth of respondents said they are looking to combat fraud through data usage, and another 20% want to achieve better pricing. Tackling these two areas will lead to better underwriting, the goal of 53.3% of respondents.
The high volumes and levels of fraud in the motor market meant it was a good place to start with real time data usage. Now, with over 75% adoption, insurers are looking to extend this approach in to other lines of business, and to apply extra data sources to drive competitive advantage right through their product range and pricing models.
However, in personal lines motor, it’s telematics that will really transform the marketplace and promoting consumer understanding of the need to capture data in order to understand behaviour. With telematics, the consumer sees the direct relationship between capturing data about their driving behaviour and how that data affects the price they pay.
Effective use of data has many benefits. Insurers have previously relied on postcodes as one of the factors when generating quotes, meaning some people were penalised for living in certain areas. Now insurers can spot good risks in challenging areas, and price their premiums accordingly.
Moving on to home insurance, insurers’ access to accurate flood data, for example, means they can offer specific ratings at property level rather than rating entire postcodes areas as one. This gives the net result of more accurate ratings and enables high risk properties to be priced accordingly. Effective use of data will provide insurers with the insight to rate every residence individually on its own merits, rather than the historic approaches.
Data will enable a more and more customer-centric approach. In insurance that will make the buying process much quicker and simpler, and improve the end-user experience. The use of mobile technology is becoming very important, with customers expecting simple, intuitive experiences through mobile devices in their dealings with insurers.
The use of data in real time will demand new skillsets right throughout the industry, coupled to the need for agile, flexible technology solutions. The challenge for insurers is to combine the various data sources held on a variety of different systems to achieve the greatest value, which means having the right technology and people in place.
About the Author
Adrian joined SSP in 2005 and has over 20 years’ experience in the market across broking, distribution, business development and technology. After 15 years in the broking industry, ten of which were with A-Plan, Adrian has spent the last 11 years at SSP. As Managing Director, Distribution and Data, he is part of the executive team, and his expertise in data and innovation ensure SSP's customers are at the leading edge of advancements in the insurance industry. Adrian has been instrumental in developing SSP's real-time pricing and telematics strategies and shaping its data strategy across all territories.More Content by Adrian Coupland