Today’s mobile, social world has created an explosion of data that is presenting great opportunities for all industries, especially insurance. Consider that by 2020 new information produced per second for every human being will reach 1.7 megabytes
. And the volume of big data will increase from 4.4 zettabytes to roughly 44 zettabytes, or 44 trillion gigabytes
With large data resources, carriers and their customers are collaborating more efficiently, resulting in better, faster, and more valuable interactions that in the end are intended to deliver a better consumer experience. They’re also entering a time where they can be more accurate and precise. For example, the data available today enables theoretical “pools of 1” versus the typical insurance pools that have led to risk sharing across large groups of people. In addition, the vast majority of data is unstructured—or social media postings, online and offline shopping activity, emails, reports, and interviews. This isn’t the data we’re used to and the implications of this potential has both pros and cons for insurance.
Pros and Cons
Without a doubt, big data’s influence is present throughout the insurance value chain - more specifically, during product development, pricing, marketing, sales, customer service, claims and management activities. Data is also being used to streamline the application and claims process. Applying machine learning algorithms to outcomes is helping claims processing. There’s also been a noted reduction in fraud through better identification techniques.
See also: Cognitive Computing: Taming Big Data
On the flip side, complexity and volume of data may present hurdles for less data-centric and smaller insurers. There are challenges in terms of technology and data science resource constraints, as well as increased consumer privacy concerns. Further, we see some companies unable to leverage data because their culture doesn’t support innovation. Some carriers, such as Progressive, don’t have that problem. Another example is Nationwide, where the company’s chief data officer, Jim Tyo, has a stated goal “to not be an insurance company but to be a data company that sells insurance
.” Unfortunately, we bump up against folks at other companies who are on the opposite end of the “strong data culture” spectrum.
While most insurance carriers have an overabundance of data about their prospects and customers, the challenge is making that data accessible, actionable and relevant in real time. The undeniable goal is to ensure the data adds value to the business to acquire, retain and grow the customer base. It’s essential to gain access to the right data at the right time and turn one-time buyers into lifelong customers.
Big data is making it easier to target markets with more precision and assist with personalized marketing (see a recent McKinsey article
on this topic)—both of which improve the customer experience. With so much data available, ensuring relevance and quality is a key difference between those successfully using big data and those who are struggling to understand it. New technologies are enabling insurance marketers like never before to sort quickly through multiple potential data sources to identify those relevant to them.
And it’s not just new data sources that offer opportunity. Our customers are also pushing the envelope by finding new use cases from existing data sources. Those who embrace this level of innovation are growing profits and gaining market share.
After 20-plus years of online media evolution, insurance marketers have started to see that an individual digital event—where the consumer is researching or raising his or her hand for an insurance product on a given brand’s site or a third-party comparison site—is one moment in time in the consumer’s journey. It’s one of several critical moments where carriers are aligning their engagement efforts. And these moments are fueling the big data available to insurance marketers, which is evidenced by the nearly 1.5 million unique online insurance events my organization sees every day.
The customer’s engagement involves research ahead of the quote request and more research after, ultimately leading to the conversion event. All of the breadcrumbs along the journey tend to be inaccessible to marketers or the media partners that are creating this behavioral data. Brands and partners are both challenged to connect these intent signals, but they are incredibly important. Technology to connect these events in the consumer’s journey is essential.
See also: 3-Step Approach to Big Data Analytics
Done right, and in partnership with the digital ecosystem, these tools can identify individual consumer behavior and link multiple activities regardless of device type. That data can be converted into insights that can then be leveraged in real time to retain current customers, grow relationships with existing customers and establish new relationships.
The majority of the top insurance companies in the U.S. are connecting the dots and using sophisticated technology and data to gain real-time intelligence into the origin, history and intent of prospects and customers. Such solutions enable carriers and agents to follow consumers on their buying journeys until the end when they purchase a policy, helping insurers observe and access behavioral data they can use to analyze the intent of the consumer at any given moment.
When marketers gain the ability to identify and take action on data, they can be more efficient and simultaneously enhance the consumer experience and increase customer lifetime value.