The Rise of Big Data in Insurance
All the vital news, analysis, and commentary curated by our industry experts.
Similar to all aspects of insurance technology (insurtech), it is the large insurers which are struggling most with modernizing systems and approaches. This is due to ingrained processes and an inability to tolerate failure, meaning that innovation is often stymied. Other challenges, such as difficulties in attracting innovative talent and entrenched IT systems, also prevent rapid change. Smaller companies and startups have often developed through trial and error, and therefore have more tolerance for failure. They also tend to be managed by more technically aware people and are less reliant on dated IT systems that would be cost-prohibitive to update.
As insurers increasingly hold greater amounts of data, often of an extremely personal nature, the potential damage of a cyberattack increases. The data is already expensive to store safely, but costly fines, set to be introduced in the new EU data protection regulation of 2018, will force insurers to invest in cybersecurity.
Many insurers are looking to reduce paid claims by preventing them. This is the case in healthcare, and is also seen in the property and motor categories with connected homes and telematics. As well as reducing claims, this will also help insurers to build relationships with customers, as traditionally contact only occurs when a policy is due for renewal.
The benefits of big data are still being deliberated. It is argued that the more information that becomes available to insurers the more they are able to price niche policies, or at least have peer-to-peer insurers cover them; diabetes is the most commonly cited example. Cheaper premiums for customers who are able to improve their lifestyle are another potential advantage.
The argument against the use of big data is that more information will lead to the creation of an insurance underclass, where sections of society become uninsurable because insurers will work out that it is simply not profitable to offer policies to certain individuals. This is something on which the head of the Financial Conduct Authority (FCA), Andrew Bailey, has expressed concerns, and he has suggested that there should be limits on the use of big data to ensure groups of customers are not unfairly penalized. An FCA inquiry into the use of big data concluded that while no immediate action would be taken, the situation would be closely monitored.
Many aspects of taxi, hotel, travel and entertainment services have been digitalized to offer customers quick and easy access. Spotify, Netflix, Amazon, eBay Uber and Airbnb have all revolutionized their respective sectors. All these services hold some level of personal information and tailor offers around them; the lack of ability to tailor products is a primary reason for the insurance sector’s inability to compete. An individualized approach, based on customer data and pushing other products based on life events, is the next step the industry will take to offer customers the level of service they have come to expect from nearly every other sector.
The challenge for insurers is to both figure out how to make money from the vast amounts of data to which they have access, and to offer customers the levels of digital service they have come to expect from nearly all other sectors.
Many aspects of taxi, hotel, travel and entertainment services have been digitalized to offer customers quick and easy access. Spotify, Netflix, Amazon, eBay Uber and Airbnb have all revolutionized their respective industries.
The report looks at how far the insurance sector has come, and what still needs to be done to achieve this.
• Big data is a growing factor in the insurance industry.
• It helps insurers to develop more accurate premiums, and rewards customers for safer behavioral trends.
• The health and motor lines lead the way, with property not far behind. More complicated pension policies in the life segment are harder to tailor based on data.
• Incumbent insurers are beginning to adapt and use data to their advantage, but the transition is easier for smaller, nimbler companies that are less reliant on systems and processes.
Reasons to Buy
The report's primary research includes interviews with experts on big data's impact on the insurance industry.
The report breaks the market down by different insurance lines, including life, health and motor. It discusses trends, and gives examples and insights from relevant primary research.
It offers coverage and analysis of key examples of big data use in large-scale companies and startups.
It provides insights into upcoming regulation, and how it could impact the market.
The report uses of exclusive data from GlobalData’s survey on the future of technology in insurance.
Table of Contents
1 EXECUTIVE SUMMARY
2 INDUSTRY OVERVIEW
2.1 All Sectors
2.2 Life and Health Insurance
2.3 Motor Insurance
2.4 Agricultural Insurance
3 MONETIZATION AND PRODUCTS
9 ABOUT TIMETRIC
9.1 Contact GlobalData
9.2 About GlobalData
9.3 GlobalData’s Services
Figure 1: Total Value of the Global Wearable Device Market, (US$ Billion) 2015
Figure 2: Total Value of the Global Wearable Device Market, (%) 2015
Figure 3: Global Appeal of Smart Homes (%)
Figure 4: Main Reasons for Running a Smart Home, (%), 2015
Figure 5: Barriers to Running a Smart Home, (%), 2015
Figure 6: Please Rate the Damage Typically Caused by the Following Outcomes of a Cyberattack?
Figure 7: How Can Cyber-Risk Best be Minimized?
Figure 8: How Much Will the Following Technologies Affect Insurance During 2016–2021? (%)
Frequently asked questions
Tel +44 20 7947 2745
Every customer’s requirement is unique. With over 220,000 construction projects tracked, we can create a tailored dataset for you based on the types of projects you are looking for. Please get in touch with your specific requirements and we can send you a quote.
Business Intelligence & Marketing Manager, SAL Heavy Lift
“The GlobalData platform is our go-to tool for intelligence services. GlobalData provides an easy way to access comprehensive intelligence data around multiple sectors, which essentially makes it a one-for-all intelligence platform, for tendering and approaching customers.
GlobalData is very customer orientated, with a high degree of personalised services, which benefits everyday use. The highly detailed project intelligence and forecast reports can be utilised across multiple departments and workflow scopes, from operational to strategic level, and often support strategic decisions. GlobalData Analytics and visualisation solutions has contributed positively when preparing management presentations and strategic papers.”
Market Analyst & Management, Liebherr-Werk
“COVID-19 has caused significant interference to our business and the COVID-19 intelligence from GlobalData has helped us reach better decisions around strategy. These two highlights have helped enormously to understand the projections into the future concerning our business units, we also utilise the project database to source new projects for Liebherr-Werk to use as an additional source to pitch for new business.”
Head of Key Accounts, Saab AB
Your daily news has saved me a lot of time and keeps me up-to-date with what is happening in the market, I like that you almost always have a link to the source origin. We also use your market data in our Strategic Business Process to support our business decisions. By having everything in one place on the Intelligence Center it has saved me a lot of time versus looking on different sources, the alert function also helps with this.
Marketing Intelligence Manager, Portugal Foods
Having used several other market research companies, I find that GlobalData manages to provide that ‘difficult-to-get’ market data that others can’t, as well as very diverse and complete consumer surveys.
Head of Customer Insight and Research, Standard Chartered
Our experience with GlobalData has been very good, from the platform itself to the people. I find that the analysts and the account team have a high level of customer focus and responsiveness and therefore I can always rely on. The platform is more holistic than other providers. It is convenient and almost like a one stop shop. The pricing suite is highly competitive and value for our organisation.
I like reports that inform new segments such as the analysis on generation Z, millennials, the impact of COVID 19 to our banking customers and their new channel habits. Secondly the specialist insight on affluent sector significantly increases our understanding about this group of customers. The combination of those give us depth and breadth of the evolving market.
I’m in the business of answering and helping people make decisions so with the intelligence center I can do that, effectively and efficiently. I can share quickly key insights that answer and satisfy our country stakeholders by giving them many quality studies and primary research about competitive landscape beyond the outlook of our bank. It helps me be seen as an advisory partner and that makes a big difference. A big benefit of our subscription is that no one holds the whole data and because it allows so many people, so many different parts of our organisation have access, it enables all teams to have the same level of knowledge and decision support.
Head of Consumer Sensory Insights, Givaudan
“I know that I can always rely on Globaldata’s work when I’m searching for the right consumer and market insights. I use Globaldata insights to understand the changing market & consumer landscape and help create better taste & wellbeing solutions for our customers in food, beverage and healthcare industries.
Globaldata has the right data and the reports are of very high quality compared to your competitors. Globaldata not only has overall market sizes & consumer insights on food & beverages but also provides insights at the ingredient & flavour level. That is key for B2B companies like Givaudan. This way we understand our customers’ business and also gain insight to our unique industry”
Senior Account Manager, TSYS
GlobalData provides a great range of information and reports on various sectors that is highly relevant, timely, easy to access and utilise. The reports and data dashboards help engagement with clients; they provide valuable industry and market insights that can enrich client conversations and can help in the shaping of value propositions. Moreover, using GlobalData products has helped increase my knowledge of the finance sector, the players within it, and the general threats and opportunities.
I find the consumer surveys that are carried out to be extremely beneficial and not something I have seen anywhere else. They provided an insightful view of why and which consumers take (or don’t) particular financial products. This can help shape conversations with clients to ensure they make the right strategic decisions for their business.
One of the challenges I have found is that data in the payments space is often piecemeal. With GD all of the data I need is in one place, but it also comes with additional market reports that provide useful extra context and information. Having the ability to set-up alerts on relevant movements in the industry, be it competitors or customers, and have them emailed directly to me, ensures I get early sight of industry activity and don’t have to search for news.