How does your business handle all the data that it has?
When the term Big Data emerged, it was used to describe a large set of data which could not be analyzed via traditional databases. In simple words, the latter cannot capture, store, manage and interpret the data.
Over the past couple of years, the term big data has changed, not only to refer to data itself, but also the technology which is used to capture, store, manage, and analyse. Big data has continued to attract the attention of a lot of industries, and the insurance industry has not been left behind according to Insurdinary.ca there are many changes underway:
Understanding the Changes in the Insurance Industry
The insurance industry has taken advantage of big data, not only to benefit itself, but also to leverage its consumers. They took advantage of big data at an early stage, because statisticians and actuaries need to review large sets of data. For this reason, the insurance industry is one of the few Industries which earns profit through predictive analysis. An insurance company, such as auto insurance, will try to predict when you will get into an accident. Once they analyze the data, they will be able to underwrite a policy with premium rates and claims.
A couple of years ago statisticians could accurately predict risk only a week prior. However, with the use of big data, it has benefited them to look further in the future. Here is a look at how big data has influenced the insurance industry.
#1. Predicting the future
As technology improves so does the ability to predict the future successfully. With big data tools, insurance companies, using multiple variables, can successfully predict when a risk might occur. For instance, health insurance companies can successfully predict the risk of future diseases. Using the current technology, they can monitor their patients, and the risk of them getting sick.
As insurance companies are continuing to sharpen their skills in predicting the future, it is benefiting them. They are now able to offer their customers the best protection at the best prices.
#2. Better Premium rates and improved service for customers
In today's insurance environment you could end up paying for poor service at a very high cost. However, the use of big data is enabling insurance companies to offer the best services for consumers, and at the best prices. Although the use of big data cannot adequately help to avoid risks, it can at least predict when the chance might happen. A customer will choose the right insurance coverage and at the best premium rates.
For example in parts of California, there are instances when wildfires occur. Therefore, using big data an insurance company can successfully predict when there is a likelihood of a fire, and in which neighbourhood. In this case, a person who lives in such an area can choose the best insurance coverage and at the best premium rates that will cover the risk.
#3. Prevent insurance fraud
One of the challenges that face the insurance industry is insurance fraud. This issue affects every individual who is covered for a certain risk. It has been deemed impossible to stop insurance fraud entirely, but with the use of big data, it can be prevented.
There are three ways in which an insurance company can prevent insurance fraud activity.
- Predictive modelling. Big data helps actuaries and statisticians to study certain variables and patterns which are a sign of fraudulent activity.
- Social Network Analysis. Social media has been one of the best platforms in which people connect. However, did you know that every individual is connected through these social networks? This media has been beneficial, especially in determining security issues, such as terrorist attacks. So, an insurance company can be able to gain relevant information using big data from SNA.
- Customer Relationship Management (CRM). It is very crucial that companies integrate their CRM to social media. This will help them accurately predict their customers purchasing trends. If you have been in an accident, the insurance companies will use CRM to determine whether you are related to the other person.
#4. Claims payment
When a customer wants to make a claim on his insurance, it can be a complicated process. A few years ago,you did not want to go through the process of filing a claim. However, with the use of big data, the process is now more comfortable and very fast.
Big data is going to change how we interact with the insurance industry, and it is only the beginning. What do you think of it, and which change do you think will come the soon? Let us know below.
