Data-driven insurance: exploring the latest trends
There's no denying that the insurance industry is data-driven. With customer records, claims data, or social media data, insurers can use a lot of information to improve their operations. Despite this, many insurers still have trouble leveraging their data.
During Future Processing’s event “Press Roundtable: Data in, data out – how to make the most of your data in insurance?” on the 7th of November, participants discussed how data science and analytics can facilitate digital innovation.
A panel of experts from the insurance industry discussed the opportunities and challenges arising from the influx of data. A roundtable hosted by Saxon East featured keynote speakers Ian Thomas, Head of Data at Aurora Insurances, Artur Niemczewski, NED at the Chartered Insurance Institute, and Krzysztof Nykiel, Head of Data Solutions at Future Processing, offering valuable insights into the changing insurance landscape.
The triad of challenges: cost, collection, and management
The discussion opened with an examination of the primary challenges facing insurance companies. As Ian Thomas pointed out, sourcing, transforming, and serving data are key components of this data-driven journey in commercial lines. “Sourcing data involves amalgamating internal data while leveraging external enrichment sources,” Ian stated. In his view, the integration of location, financial, and governmental data unveils new dimensions for insurers to understand and assess risks comprehensively.
Krzysztof Nykiel emphasised the significance of transforming data, emphasising data quality as the linchpin. “We will face the explosion of vast data that is being transformed. Ingested into our systems, it will be exploding even more soon. The challenge here is to design a system capable of handling this additional data input, this constantly growing majority of data.”
Big data has been discussed for years in the insurance industry, but now its implications are becoming more understandable.
“IoT devices, connected to the Internet, add to this vast information. To enhance our services, we must utilise as much information as possible from these connected devices,” Krzysztof explained. “This necessitates the appropriate capability on our infrastructure, especially on cloud infrastructure, as everything is moving towards the cloud. We need to be prepared to have our internal data in databases connected to this constant flow of data from various sources. It’s about proper ordering, processing, and managing data in and data out.”Krzysztof NykielHead of Data Solutions at Future Processing
Navigating ethical boundaries and ensuring data privacy
As the conversation veered towards ethics and safety, concerns regarding customer data protection emerged as a focal point. The speakers emphasised the paramount importance of maintaining trust and transparency. Mr Thomas underlined the significance of corporate values aligning with actions to build and retain trust among customers: “Reputation risk is critical. Companies must adhere to their stated values to retain credibility.”
Artur Niemczewski pointed out that private data is well-guarded in the UK and the EU, as GDPR is a powerful regulation and the Information Commissioner (ICO) has vast powers. In Mr Niemczewski’s view, insurance professionals should be confident about stringent data protection regulations.
As well as emphasising the importance of ethical considerations in insurance professionals’ digital practices, Mr Niemczewski recalled that the CII has published a “Digital Ethics Companion” since 2019 to assist insurance professionals in understanding ethical issues when they undertake digital work.
As Krzysztof Nykiel explained, to harness valuable insights from algorithms, it’s crucial to train them using appropriate data while ensuring stringent privacy measures.
“Anonymising the information used for training or issue resolution in machine learning and artificial intelligence applications is vital. Moreover, maintaining meticulous data governance procedures within organisations is imperative. Different organisations exhibit considerable contrasts in this regard.”Krzysztof NykielHead of Data Solutions at Future Processing
Hence, it’s essential to establish data governance frameworks to discern who within the organisation has access to specific data, restricting it to the absolute minimum required for their duties.
In Mr Nykiel’s words: “Tools like data cataloguing enable tracking the organisational data inventory, while data governance involves implementing robust security measures and conducting risk assessments to anticipate potential leaks or breaches. Addressing these technical aspects is paramount when developing data processing or artificial intelligence systems aimed at enhancing insights and improving decision-making processes.”
A glimpse into the future: data processing in a decade
Speaking about the near future, AI and machine learning will revolutionise the insurance industry’s future data processing, the speakers predicted.
Ian Thomas compared the inexorable rise in the value of data and its applications to the unfathomable advancements in AI technologies over the past decade. “With the breakthroughs in ML and AI, data will be used in a more valuable way than it has ever been before.”
“We’ll experience an evolution in the way data is handled, processed, and utilised. Technologies like AI and machine learning are set to undergo significant advancements. We might find ourselves leveraging sophisticated algorithms that enable more accurate decision-making processes.”Artur NiemczewskiNED at the Chartered Insurance Institute
“It’s hard to predict what’s around the corner in the next ten years,” admitted Krzysztof Nykiel. “Certainly, Artificial Intelligence will become more sophisticated and increasingly help us in making proper decisions. So, faster speeds and more sizes will be necessary. Customers already expect faster operations, better customer care, and more precise information concerning insurance policy issues. Real-time processing is already in place or just around the corner, and it will be utilised by more industries to provide better operations and faster responses. We’re looking at developing algorithms based on millions of real conversations. These algorithms, when trained and integrated appropriately, yield promising outcomes.”
As insurers navigate the data deluge, Future Processing’s Roundtable provided a comprehensive roadmap, emphasising the importance of harnessing data’s potential while safeguarding the privacy and trust of their customers.
It is at the crossroads of technological innovation and ethical responsibility that the future of insurance lies, a path that carries both challenges and opportunities in equal measure.
