How data analytics can get insurers future-ready

By Ciaran Dynes
Ciaran Dynes, Matillion Chief Product Officer, explores how insurers can protect their businesses and customers in a turbulent environment using data

So far, our efforts to tackle climate change haven’t made a fast enough impact. Countries all over the world are beginning to see dramatic changes in its weather patterns over the last few years.

In addition to unforeseeable weather events, global warming is also causing sea levels to rise significantly. In the UK, coastlines are rising between 3 and 5mm every year, raising concerns about the future of many towns and seaside communities. The potential consequences, including coastal erosion and flooding, could have a significant impact on people, infrastructure and natural systems and cause life as we know it to change.

Coastal property owners have been facing a growing number of problems over the last couple of years when looking to secure the future of their homes. On the one hand, potential buyers are put off by the impossibility of getting a mortgage to buy these coastal homes, and on the other, existing homeowners themselves are finding it difficult to insure their properties.

Data brings a great opportunity in the quest to manage unpredictability; it allows insurers to better manage risk and improve underwriting. Many insurers will have large volumes of extremely detailed data available to them - from claims histories and risk assessments to information on policyholders and policies – but the sheer amount of it can feel overwhelming. Another issue is that data is often not stored and managed in a ‘business-ready’ way that would allow companies to get real insights from them. This begs the question; how can insurance organisations make the most of their available data to protect not only their customers, but themselves too?

What is causing insurers to pull back?

Many home insurance plans haven’t historically included “earth movements” in their policies. Anything from earthquakes, landslides, erosion or sinkholes were often overlooked because they were considered such rare occurrences that they were too expensive to be considered into premiums. Plus, insurance companies often lacked the right historical or modelling data to assess the risks as was needed.

Times have changed and the insurance industry must adapt. Property owners must be protected from any worst-case scenarios, and at the same time, insurers should be able to protect their assets. It’s not easy to model future climate scenarios while ensuring complete policy coverage for natural weather phenomena, and this is a very new practice. But thankfully, data can be trusted to inform decisions and minimise any uncertainties.

Saving the day with data

People don’t often think of data as part of the solution when they think about the climate crisis and how to solve it. However, data is not only a renewable source but it’s also reusable, and if used in a productive and efficient way, it can work wonders to help insurers manage the unpredictability they are currently facing.

Insurance policy underwriters need relevant environmental data insights if they want to create accurate and fair policies – information which they don’t usually have readily available. Insurers can accurately track and predict localised climate impacts by investing in the right data analytics tools. Through on-demand access to insight streams, whereby raw data is informed into a business-ready state, brokers can provide homeowners with a more informed analysis.

Improving sustainability despite roadblocks

Organisations from a wide range of sectors have undergone significant digital transformation over the last few years, but many businesses still find it difficult to load and transform their data at scale. Providing the right data to the right people at the right time is crucial for insurance companies. Data teams will be unable to react to market trends in a timely manner if data is hard to locate and extract, at the expense of their productivity.

Even if insurance organisations are aware of the importance of data, it is still common for them to come across hurdles when looking to make the most of it. Businesses must be able to consolidate their current data sources and access them from one centralised platform with a democratised cloud data system. The tools need to be rolled out across the entire insurance company to get the most out of the investment and benefit all areas of the business, from risk to claims management.

Having timely and integrated climate and risk data would also be beneficial for government and policymakers. Knowing which areas are most at risk helps organisations of all kinds to plan and make informed decisions ahead of time. This knowledge could be applied when new buildings and facilities are being developed, but also in protecting existing buildings. Long-term, the goal is to use the technology and resources available to make smart decisions that benefit everyone, from homeowners to insurers.

About the author

Ciaran Dynes

Ciaran Dynes is an accomplished product leader with over 20 years of experience in global product development companies. Ciaran serves as the Chief Product Officer at Matillion, the leading provider of data transformation software, where he is responsible for the product strategy and works with customers to understand their requirements. Before joining Matillion, he held a series of roles at leading integration software vendors including Talend, Progress Software and IONA Technologies.

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