Among other advantages, massive data management helps a core aspect of the industry: risk assessment.

The entire concept of insurance business is based on risk assessment. Whether it is property and casualty insurance or any other type of life, home or auto policy, the main task is to assume the possible risks relevant to each client and predict the possibility of the policyholder making a claim. 

Given the type of industry, obtaining and analyzing data is a fundamental pillar of this business. Basically, the more efficiently you can assess risks, the more accurately you can detect high-risk policyholders and set appropriate insurance premiums. In this context, the incorporation of Big Data only brings benefits.

Insurance organizations can also use this approach to make data-driven decisions that improve business-related outcomes. Benefits can include more effective marketing, new revenue opportunities, customer personalization and operational efficiency in an industry that has long been run by traditional standards.

According to data provided by the statistics and studies service of the insurance sector in Spain (ICEA), approximately two thirds of insurers have already applied Big Data or are working on it. In this sense, the most frequent areas of use are "Customer Segmentation" (92.4%) and "Fraud Risk" (83.3%), but also "Process Efficiency" (74.2%), and "Redesign of Products» (45.5%).

As a first point and as with so many other industries, Big Data combined with other technologies allows us to automate certain processes and take advantage of employee efforts more intelligently, which leads to a reduction in expenses.

However, it is noteworthy that there are some core aspects of the risk business where the transformation that the strategic management of large volumes of information can bring is fundamental; For example, by checking the trends of previous fraudulent cases and analyzing external trends, it is possible to identify fraud more efficiently than in the past. 

Thanks to digital data sources such as social networks or IoT devices, companies gain deeper insight into customer qualities and behavior that will statistically increase or decrease risks and determine the amount of premium each must pay. one. In this sense, the use of large masses of information provides insurance providers with more detailed information, which can be used to distinguish more limited demographic groups and personalize offers. 

Likewise, in an industry where paper and the errors derived from its handling have always predominated, Big Data can help detect dependent and independent variables that help settle claims much more quickly and easily. Automation, in turn, allows you to accelerate internal processes and frees employees from manual and repetitive tasks.

On the other hand, there is also a significantly improved customer experience, for example, by allowing information on customer behavior to be collected and thus detect the first signs of dissatisfaction and resolve problems proactively.

There is no doubt about the competitive advantage of data to this industry: improved risk calculation helps avoid excessive risk exposure which, in turn, allows insurers to reduce premium costs and provide a more personalized service .

New approaches can also be devised to encourage prudent behavior through Big Data and data intelligence, allowing the industry to transition from mere risk protection to an industry of risk prediction and prevention.

Julio Cesar Blanco – January 16, 2023