As part of our insurance-focused round table with Exasol earlier this year, we raised the following question:
“A little while ago, Red Olive was challenged by an online insurer to provide the data solution for a near real-time quotation system, to include a range of fraud detection rules. Is real-time analytics important for your business? Where and why?”
Our attendees had some interesting responses to this. There is a move to reduce human contact in some processes to improve efficiency and speed up the service to customers. People talked about allowing claimants to upload pictures of damage to cars or property, for example. We also discussed how focusing on wider digital transformation with particular emphasis on user experience is designed to make insurers more attractive and competitive to both business and commercial customers.
Insurers are increasingly focusing on improving the way they gather, store, access and use data, and these improvements should result naturally in better service to clients and closer-to-real-time outcomes.
Data more useful for future planning
Interestingly, one of our insurers wondered if ‘real time’ would be something that would work for insurers at all. And that, in fact, the value of the data to the insurance industry is in its retrospective nature, where it is used by underwriters and actuaries to inform future decisions.
“You can’t change the endorsements on a policy based on what you are seeing in real time,” said one insurer. “Insurers are unlikely to be calling customers to say, ‘I can see there’s a hurricane coming, so I am going to change your policy now because I don’t want to cover you anymore’. The value of the data is in its use forecasting future behaviour or situations.”
Jefferson Lynch, CEO at Red Olive commented: “For the quotation system that Red Olive was originally asked to provide for an insurance customer, the client was interested in was being able to analyse certain data at the application stage.”
“So, let’s say you get someone looking for motor insurance – the client wanted to see if that same individual was getting multiple quotes, by using a different postcode for example. More interesting was whether that was likely to be ‘reasonable behaviour’ or not. If you live in a very dense urban area and you rely on street parking, is it reasonable to see if it’s cheaper to insure your car for parking on one street compared to another?”
One of our attendees spoke about his experience with a payday lender. “We did combine the analytics with the geographic location and the actual stamp of the device the user was applying from. This will be harder in the future because of various privacy laws that are likely to come into force – but historically, we have been able to track everything. We knew, for example, if someone based in Eastern Europe was using the same device to apply for loans under two different names and addresses. Our system would calculate that into the decision to say ‘yes’ or ‘no’ to the applicant.
“Of course,” he added, “if there is any untruth on the application, the cover is null and void, so there’s an element of the risk that you can calculate into the transaction anyway, without the need for doing things in real time.”
The consensus on this question was that, for particular instances, insurers would like to explore this area more, and some sample real-time use cases might help them to see the value of investing in real-time analytics and to move the issue forward in their businesses.
If you are interested in joining us for our next round table, email [email protected] and we will send you details about forthcoming events. If you are looking for more clarity on how to get more value from your existing data or moving to the cloud, get in touch with us or read our case study on how Red Olive has helped Admiral move to Google Cloud.