Insurtech is having a transformative impact upon the global insurance market, the role of data is absolutely central to the entire project. Data is not simply the facilitator for better underwriting and keener pricing, but is the very DNA of the 21st century connected organization.
Data will power connectivity with customers, generate insights into customer behavior, driving risk pricing and customer engagement. Insurers that do not have control of data will be in trouble and are likely to get left behind.
The data required is quite different from in the past. It used to be that personal data - `the who, what and where' of customer relations - was the most important. It demonstrated who owned the client, but that is a model already in decline.
Big data is essential in order to manage RPA and artificial intelligence (AI), but it is only useful if it is associated with behavioral data - they why and when. However, consumers are in the driving seat when it comes to digital engagement, as they control the access.
Access poses certain challenges for the insurance market to overcome. Though people freely share vast amounts of data and even their whereabouts with social media platforms, they are often reticent to disclose data to an insurer. There is a general mistrust of governments and large corporates misusing data against the interests of its customers.
Consumers may have good reason not to trust all organizations, data breaches and `fake news' have exposed inherent weaknesses or governance gaps.
Although there is strong growth in the adoption of wearable tech that is influencing the healthcare sector, consumers are generally split on the issue of sharing personal and behavioral data. Insurers must tackle the ethical questions that arise about how they will use this data if they want to avoid a potential backlash now - or in the future - against big data from the consumer prompted or reinforced by regulators.
This is particularly important as insurers generally lack the skills to process and interpret this type of data efficiently and are likely to engage external expertise to support faster deployment. This will require engagement and partnership between in the insurer and the customer so that customers understand that in giving up their data they receive a tangible benefit. Today, that may manifest as a reduction in premium or discounted gym membership, but could lead to more sophisticated profit sharing rewards for efficiency savings in the future.
Trust will also need to be the foundation of the fledgling industries in the rapidly developing economies, where there is no existing culture of purchasing insurance.
Insurers need data for the insights that analytics will provide them to assess risk from the individual up to macro trends. But, like oil, it is getting hard to extract, particularly if you are using inappropriate or suboptimal processes.
Any lack of data will create gaps and cause integration and process flow issues, so it needs to be assessed from as an end-to-end process.
It is unlikely there will be a convergence of standards. Different business models reflecting different approaches will proliferate, leaving China, with its open approach, to continue to out-innovate developed markets.
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