What has Big Data Changed about Insurance Strategy? Everything.


According to the analytics news portal Datanami, big data is thoroughly shaking up insurance. “In his 25 years in the insurance business, Capgemini’s Seth Rachlin has never seen insurance companies move so quickly to change their business models,” said Datanami Contributor Alex Woodie.

That’s thanks to the new capacities that big data has introduced. It equips insurers to set fairer, more efficient premiums. It helps insurers crack down on fraud. And, it also provides insights they can use to market products and services to targeted customers.

Major innovations in analytics bring sweeping industry change

When a few pioneers shared spectacular results after bringing analytics into auto insurance, a chain reaction ensued. Over the last 10 years, analytics has spread into home, commercial building, workers’ compensation and health insurance, transforming whatever it’s touched. For example:

  • Advances in parallel computing and statistical modeling make near-real-time calculations possible.
  • IoT sensors support business model-changing innovations in how data is collected and used.
  • Data from social media is being harnessed in the worker’s compensation market to spot fraud.
  • Micro-segments in auto and retail are leveraged to predict consumer behavior more accurately.
  • Highly-segmented patient models can now be based on conditions, diagnoses and outcomes.

“Predictive, statistical modelling basically means working out what will happen in the future by measuring and understanding as much as we possibly can about what has happened in the past,” said Ben Marr at Forbes. But where the future is concerned, big data introduces insecurity as well as innovation.

The future of big data in insurance may include industry consolidation

Rachlin anticipated a trajectory of industry consolidation. “There’s a tremendous number of small insurers,” he said. “They’re not going to be able to afford the technology and capabilities to actually be competitive. They’re going to adverse select bad risk and they’re going to have issues. That’s happening already.”

Today, no insurer can afford to ignore the performance impact that analytics brings to the business. And just about every insurer is calculating the danger of getting left behind. Those who succeed in maintaining or improving their position in widespread industry consolidation will be those with the tools not only to collect relevant data, but to make sense of it.

The question, then, is not whether you can afford the technology and capabilities to be competitive, as Rachlin said, but how long you can expect to survive without them. At Silvervine, we provide the insight you need to stay competitive in the midst of a game-changing disruption. Talk to us about how we can position you to thrive in the midst of the big data revolution or download our white paper “Losing Your Legacy” to learn more.