Data has always been an important asset in the insurance industry. However, today it’s more relevant than ever. Data can be analyzed to provide insurers with deeper business insights. It also has opened the door to a growing group of digital natives and insurtechs that bring innovative ideas and solutions to help accelerate and improve the customer journey.
In addition, the emergence of artificial intelligence (AI) has increased the benefits of data modernization across industries. AI and analytics are widely recognized for their potential to bring greater efficiency and innovation to the entire insurance value chain; from customer acquisition to claims processing, and for all stakeholders, including customers, agents and employees.
Challenges with Modern Data Modernization Practices
However, efficacy of AI and analytics depends on current, accurate and relevant data. It is key to competitiveness, and data modernization in insurance is key to this evolution. Mainstream insurers often fall short when it comes to using data effectively. They struggle with data infrastructure, governance and management. Therefore, they are severely constrained in their ability to leverage analytics and the latest technology to inform better decision-making. Legacy systems, siloed and data modernization challenges and growing information volumes make it difficult to manage and harness data effectively to reinforce strategies and achieve business results. The increased importance of nontraditional data from third-party sources creates additional challenges, as companies often find it difficult to align this information with their existing company data stores.
To address the problem, insurers need to fundamentally rethink the technology foundations that underpin their data driven efforts. Insurance data modernization typically involves designing responsive data architectures that can leverage both traditional and nontraditional sources of data to streamline and automate data governance and management processes; and applying advanced IT service delivery methods, such as Agile, DevOps and ML-Ops.
As data volumes increase exponentially, insurance companies may improve their competitiveness, relevance, compliance, and long-term profitability by mining internal and external data sources to keep up with the exponential growth. Market share will continue to shift in favor of insurance companies that have invested heavily in data collection, analysis and artificial intelligence. This shift will significantly affect key metrics like loss ratio the efficiency with which risks are priced, and the timeliness and accuracy with which claims are settled.
Concurrently, the rivalry is getting fiercer. Companies in the in-sur tech industry are succeeding by improving their cross-selling and up-selling techniques and receiving valuable insights from more accurate customer data.
Data Modernization on Cloud: The Best Way Forward?
Your data infrastructure should use data modernization in cloud technology to enable the business to scale up and down as computing requirements change. Although legacy data platforms once satisfied requirements, they are now hopelessly overworked as information demands continue to evolve. Traditional data platforms and infrastructure do not facilitate analytics while being too rigid. Many insurers are unable to bring together diverse data types into a single data store. They suffer from time-consuming reporting, experience data quality issues, and most importantly cannot answer forward-looking, predictive questions without lots of data movement.
This is the fundamental reason why insurers of all sizes will need insurance data modernization. This will allow them to adapt to ever-changing business needs and manage the proliferation of data. The gains are multifold. Businesses become flexible and responsive, with standardized processes and a single source of truth to support decision making. But that's not all. In this blog, we delve deeper into the exciting benefits of insurance data modernization.
Drive Intelligent Decisions by Modernizing your Insurance Data
To survive the current era of unparalleled uncertainty, forward-thinking companies are relying more and more on data to make smarter, more timely decisions across the board. Furthermore, AI is changing the face of competition and innovation in the insurance data modernization industry. New insurtechs are using data and AI to enable a fully digital, innovative, customer-centric experience, with automated processes and more efficient operations providing real-time solutions to customers.
Innovative insurance firms are using data modernization as a mote that differentiates them from the competition. Consider the case of Oscar Health which leverages large amounts of data. They employ AI, analytics and ML to compile and synthesize patient data into actionable insights for physicians, and to power a health-tracking app.
It’s clear as day that, for many insurers, achieving what we call intelligent decisioning will require data modernization best practices. This will empower them to draw actionable insights from a variety of traditional and new sources - wearables, auto telematics, building sensors and the evolving third-party data landscape.
Yes, Data Modernization Help Expand Risk Appetite
There is a significant uptick in insurance companies concentrating on data-powered growth by employing data-driven methods to increase their risk appetite and penetrate new market segments. Along with improving existing plans and adding to their scope of coverage, insurers are also leveraging data to create innovative new offerings.
In addition, firms are moving towards deeper segmentation of consumers based on data-driven risk pricing. Modern firms are creating new risk-transfer solutions based on advanced analytics. They are able to revisit actuarial assumptions such as loss ratios, emerging-risk scenarios at the regional level and global level through data-derived insight. It has become easier to model new & emerging risks based on data from diverse from internal and external sources.
Insurance data modernization enables firms risk entering new markets or sub-sectors that were previously off-limits. It is facilitating the shift from protection to prevention. The exciting thing is these data modernization in insurance initiatives are unleashing new opportunities, accelerating the development of emerging insurance solutions powered by real-time data such as micro-insurance and parametric insurance.
Enhance Customer Loyalty with Value-added Services
With minimal contact between carrier and customer, insurance is typically a low-touch product. By offering value-added services, companies can build customer intimacy and drive loyalty. As such, insurers are increasingly pivoting from standardized plans to modular solutions, customized to the needs of the individual.
Powered by data modernization in cloud, several new platforms are emerging based on business strategies that revolve around capturing first-party data. These data-powered, cloud-native platforms are helping insurers engage customers and while providing them with a seamless experience. Datasets are extracted from digital health and wellness ecosystems which become a source of new customers and revenue. Consider the case of UK-based Prudential. Through its wellbeing app, Pulse generated 2.2 million leads for agents. That’s around 10% of its annual premium equivalent.
Bringing IoT Data to the Forefront in Insurance
Interestingly, insurance carriers are using IoT data to provide value-added service and reduce claims in the property and casualty (P&C) segment.
India-based ICICI Lombard General Insurance provides data-driven marine-transport services. This is in addition to its standard plans. It offers comprehensive digitization of logistics operations and monthly analytics reports. This is further enhanced with transporter, route optimization and carbon footprint monitoring. To facilitate the movement of vaccines, a temperature-sensitive cargo for the pharmaceutical industry, Lombard launched an environment-monitoring services. Multiple built-in triggers alert to changes in the temperature of the cargo, mitigating losses.
Another pioneer, Zurich Insurance Group uses IoT sensors to monitor the health of customer machinery. Sensors gauge levels of fire-related risk and an app alerts customers to high readings so customers are able to see what they need to do to mitigate the risk.
This level of connectivity was made possible only because these data modernization in insurance firms had already undertaken insurance data modernization which enabled them to connect different IoT devices into a seamless tapestry.
Addressing the Avalanche of Opportunities with Data Modernization
Data modernization best practices can help create a flexible but industrialized approach to managing data, taking it in, processing and analyzing it, and rapidly delivering actionable information and insights to the business. In an era when insurers are inundated by data, data modernization helps focus on what gives highest business value. It can enable firms to perform up-front assessment of various data sets. Firms can find what data is relevant providing the intelligence needed to improve the insurer's claims-loss ratio and more.
This is just the start. The benefits of data modernization extend beyond this. In designing and creating a responsive architecture, ML and natural language processing can be used to analyze data to understand customers, operations and products. This will empower firms to automatically scale compute environments to optimize performance, cost, backups while monitoring and manage workloads.
Unleash New Opportunities, Innovation and Growth with Cloud4C
Data has long been a competitive differentiator for insurance organizations. Insurers need to channel insights obtained from proliferating data volumes to accelerate their growth, through improved customer engagement, segmentation, churn reduction, and more accurate risk assessment. With a more nuanced approach to data, they can cater to new segments while performing competitively.
The growing use of AL, ML and analytics opens the door to new ways to serve customers. At Cloud4C we understand data modernization is the key to enabling this kind of innovation. Explore our advanced data modernization solutions and services powered by cloud, unleashing the real potential of data to transform business functions end-to-end. Also discover our unique Insurance-in-a-Box solution to blueprint your tailored digital evolution journey with the best of cloud, AI, Data, and Automation technologies. Get in touch with our experts and get started on your data modernization journey, now!