As data turned out to be more than a means to an end, various industries are now focused on analyzing and re-analyzing its significance. Businesses, regardless of the sectors they belong to, are working towards monetizing data to get a competitive edge over their adversaries and outperform them. Similarly, the data in insurance has a lot potential to drive an insurance carrier to the next level.
On the other hand, the insurance industry has been collecting a wealth of data for decades but was quite slow to capture its real potential. Experts believe that the use of data in insurance opens doors for nearly endless possibilities. As more insurance consumers move online for product and price comparison, smooth interactions, and many other reasons, insurers need customer data now more than ever before. Today, insurance carriers have access to powerful analytics technology that enables them to use data in the best possible ways. But in order to become a data-driven insurance company, you should have a clear picture of where to get started.
Importance of data in insurance
Businesses aspire to stay in the competition. In order to do so, they either need to start their data-driven transformation or accelerate it. This step drives enhanced digital customer experiences and reduced operational costs. Being a data-powered business pays off in many ways:
- Better strategic agility: To draft any business strategy, enterprises usually rely on data, such as sales figures, historical data, and market projections and predictions. Modern-day businesses have the advantage of using a volume of data to build their strategies. By migrating data to the cloud, enterprises can take their first step toward building a modern data strategy. This move allows companies to add a variety of data analytics to pull up insights that help in identifying challenges, threats, and opportunities, resulting in increased business agility.
- Improved customer visibility: If data is used in a smarter way, it could help insurance companies to know their policy buyers better than ever. They get an understanding of who their customers are, what they need, what they look for, what modes would they prefer to buy their policies, and how they want to connect with the insurer. The trick to knowing your customers lies in accurate data analysis. By unifying data across multiple sources, enterprises can derive valuable information. This process also enhances customer-support interaction.
- Streamlined operations: To deliver superior customer experience, businesses need to improve their behind-the-scenes operations. With intelligent data monitoring, businesses can manage and optimize their operations in real-time. Streamlining activities will help in underwriting and many other processes. In fact, a McKinsey report states that by automating the claims process alone, insurance carriers can reduce process costs by 30%. Timely delivery helps in achieving operational excellence, in turn leaving customers happy.
- Real-time insight-driven innovation: Businesses can capture data in real-time, which helps them refine customer offers and experiences. A mature data-driven enterprise can work towards driving innovation. This data can also be used to create hyper-personalized policies, easy online applications, and dynamic application engagement.
Businesses that rely on data for making strategic decisions earn a competitive edge in the market.
Roadmap to becoming a data-powered insurer
Industry experts predict that data-powered insurers will keep improving their operational efficiencies in the coming years by tying their business decisions to significant analytics insights. They will be able to open new ancillary revenue streams while brushing up their business agility.
Today, for an insurance carrier to commence its journey towards becoming a data-driven business – they would require a proper strategy.
1. Data Value Framework
The framework is capable of transforming data into intelligent insights. Data in the insurance industry can be used to generate more personalized and affordable insurance policies. This information base is created by collecting data from customers directly and brokers who gather customer data and keep them anonymous. For companies to generate value out of data, they need a clear strategy, starting with system designs, use of the fetched data, and where it can be applied. There should be dedicated systems designed to capture data efficiently. This data is then transmitted and stored in an organization-wide accessible place so that it can be used from anywhere at any time to draw valuable analytics. The framework gives clarity on how to transform data into value.
How does this framework work? Firstly, the data is gathered from multiple sources to create a central database. It is then used to fetch the value in order to serve customers better, improve service efficiency, cut operational costs, and save time. The framework acts as a bridge between the central repository and value creation. It involves several processes, such as data collection, data analysis, data transmission, and value creation.
2. Information Asset Inventory
The inventory takes care of the most crucial information assurance principles. Every organization should enlist all its data processing assets under this inventory. The recorded dataset must include the document’s serial numbers, version, file path, file format, value, and metadata to improve the readability and understanding. Moreover, every entered document should come with a certain security classification, which can gauge the level of protection the file should have based on the devised security plan. Though this is a detailed and time-consuming activity, maintaining such a huge list of assets is the best security practice. This step ensures that your critical data is safe and protected. You can assign lower to higher protection levels to your assets based on their significance and vitality.
3. Information Technology Architecture
IT architecture is a basic framework covering all the components of an organization’s IT infrastructure – from computer systems to policies and guidelines in order to provide the support needed for managing the organizational services. By adding more components to this framework, professionals can increase or decrease the complexity of the entire network. An IT architecture navigates the process of planning, acquiring, building, altering, interfacing, and deploying IT assets across various departments with ease.
4. Data Security and Management
Having a data security and management system ensures that you have a protection layer in place to save critical data from unauthorized parties. It analyzes, oversees, controls, and safeguards the data access and allows it to be used in intended ways. In simpler terms, the system involves a wide range of techniques, processes, and practices to ensure that only authorized parties get access.It also takes care of data governance – a process that follows internal data standards and policies to manage the availability, usability, integrity, and security of the data in enterprise systems. Effective data operation makes sure that the stored data is consistent and trustworthy across all the departments.
5. Data Operating Model
This model revolves around building an organization-wide accessible system that addresses how data is being treated across organizational processes – from data collection, cleansing and enrichment to data sharing.
Data collection outlines how the data is being collected, is there any expectation-reality gap, how to measure the data, and how to drive value out of raw data? The later step jumps right into ensuring the quality of data and how it can be enriched to retrieve strategic decision-making insights. The model then deals with different forms of data sharing: reciprocal data exchange, information pooling, and more.
This is how you can start your journey to becoming a data-powered insurance carrier.
Enter the world of transforming insurance customer data to create value with Technovert
In a journey to becoming a data-driven organization, your company would require the expertise that can deploy a system without disrupting the underlying infrastructure. This transformation will pave the way to elevate the existing capabilities, such as decision-making processes, product/service developments, and customer engagement. Thus, leveraging corporate and customer data in insurance can take your company to the next level.