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Can Insurance Underwriters Tame the Big Data Beast?

July 8, 2013

Insurance UnderwritingInsurance underwriting is dependent on evaluating data to assess risk. But with the proliferation of Big Data and complex analytics tools, once hard-sought information has now become ubiquitous. What does this mean for the future of insurance underwriters?

It means that the face of underwriting is currently undergoing a radical change. Now, underwriters will have to shift their focus from creating, gathering, and storing data to sifting through massive amounts of information, learning what to keep and what to throw out, and how to effectively leverage it. Real-time observations and analysis and the ability to react quickly and decisively are becoming increasingly essential.  Some insurers are looking to Big Data to take a more proactive approach to handling risk over time. Changes in activities of an insured can be analyzed and allow insurers to act pre-loss.

In March, 2013, Celent released a report on surveys they conducted on the perception, influence, and impacts of Big Data on banks and insurance companies in North America, titled “How Big is Big Data?: Big Data Usage and Attitudes Among North American Financial Services Firms.”  Celent found that only 20% of insurers surveyed had hands-on experience with Big Data in a production setting, stating that, “The bulk of experience lies with projects aimed at improving sales results or reducing risk/fraud.”

Celent’s report highlighted the discrepancy between insurers’ belief in the value of Big Data to give them a competitive edge and their knowledge and ability to fully utilize it. They reported that among early adopters of Big Data usage (those using it for more than a year), “70% of projects have met or exceeded business case expectations.” These companies are seeing clear payoffs for devoting resources toward learning and leveraging Big Data analytics.

In order to stay competitive, insurers will need to invest in technology and training to keep up with the constant and exponential growth of Big Data. This may prove to be the new indicator of who will remain relevant and who will get left in the dust.

Are you using Big Data?

Article by: April LaRita Green

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