Why Data Analytics In The Insurance Industry Is A Major Game Changer

Data analytics in the insurance industry is transforming the way insurance businesses operates. Here's why that is important.

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March 25, 2019
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Technology has had a profound impact on the insurance industry. Insurers are relying heavily on big data as the number of insurance policyholders also grow. Big data analytics can help solve a lot of data issues that insurance companies face, but the process is a bit daunting. It can be challenging for insurance companies who have not adjusted to this just yet.

The National Association of Insurance Commissioners has talked about the applications of big data in the insurance industry.

“As insurers collect more granular data about insurance consumers, state insurance regulators need greater insight into what data is available to the industry, how it is being used, and whether it should be used by insurers. While the use of big data can aid insurers’ underwriting, rating, marketing, and claim settlement practices, the challenge for insurance regulators is to examine whether it is beneficial or harmful to consumers,” they state.

Effect of Big Data Analytics to Customer Loyalty

What is one of the reasons why some insurance companies get more customers as compared to others? It is because they can provide the things that their customers need. The more that they can give what the customers expect, the more loyalty customers reciprocate in return.

Instead of just aggregating one policy from their insurer at a time, they may get all of their insurance policies in a single, centric dashboard. Even if people solicit an anonymous car insurance quote from a different company that is lower than others, they would still stick to a company that they are fiercely loyal to. This means that they will need to consider other factors, such as whether they have been unfairly prejudicing customers on their race. Insurance Journal says big data is able to help address this.

Big data analytics can be very useful in acquiring all of the necessary data in a short amount of time. This means that insurance companies will know what their customers want and will offer these wants immediately. Insurance companies such as American Insurance will also have the ability to provide personalized plans depending on their customer’s needs.

Big Data Analytics in Fraud Cases

One of the biggest issues that insurance companies are facing right now is fraud. According to industry findings, 1 out of 10 claims is fraudulently filed. This is an alarming rate, especially with the number of policyholders that an insurance company may have. Some consumers filing fraudulent claims have done so sloppily, which makes it easier for the company to seek restitution and prosecute the offenders before they can drive premiums up on other drivers. Some may be meticulously done so people can get away with it.

With big data analytics, a large amount of data can be checked in a short amount of time. It includes a variety of big data solutions, such as social network analysis and telemetrics. This is the biggest weapon insurers have against insurance fraud.

Subrogation

A large amount of data that is needed and received for subrogation cases. The data can come from the police records, medical records, and even the notes regarding the cases. Through big data analytics, it will be possible to get phrases that will show that the cases that are being investigated are subrogation cases.

Settlement Cases

There are a lot of customers who may complain that lawsuit settlements often take a long time, because there is a lot of analyzation that needs to be done. With the use of big data analytics, the processes can help settle the needed claims instantly. It will also be possible to check out and analyze the history of the claims and the claims history of each customer. This can help reduce labor costs as the employees do not have to put all of their time into checking and finalizing each data regarding the claim. It can also give the payouts to the customer faster which means that customer satisfaction will also greatly increase.

Checking More Complex Cases

There are some people who have acquired anonymous car insurance quote and have gotten insurance in order to file claims to acquire money from the insurance company. Some cases are obvious frauds and the authentic ones can be immediately analyzed with the use of big data analytics. Yet, there are some cases that are just too complex that it would take a lot of checking to see if the data received coincide with what the customer claims. Big data analytics use data mining techniques. These techniques allow the various claims to be categorized and scored depending on their importance. There are even some that will allow the claims to be settled accordingly.

Some Common Issues in Using Big Data Analytics

It is always important for insurance companies to consider both the good and the bad details about using analytics. Some of the good things have been tackled above. These are just some concerns that you need to be familiar with:

  • You still need to use multiple tools in order to process the data which can be problematic as data may get lost along the way.
  • Getting too many data analysts when a few will be enough.
  • Not unifying the gathered information.

Take note of these issues so that they can be avoided.

With all of the things that big data analytics can do, it is not surprising why a lot of insurance companies would need to start using this soon. This can be integrated little by little so that it will not be too overwhelming for everyone who is involved. The sooner that this can be done, the better though not only for the customers but for the insurance company as a whole.

Big Data Will Address Countless Insurance Industry Challenges

The insurance industry is more dependent on big data than many other sectors. Their entire business model is built around actuarial analyses. As a result, they will need to rely on big data to solve many of the challenges that have plagued them for years. Big data will also help them fight fraud and process lawsuit settlements more quickly.