DTSQUARED on Big Data and the Insurtech Industry

DTSQUARED works across the UK, US and Europe to solve data challenges for numerous large global organisations including HSBC, Credit Suisse, Barclays, Ford Credit and Deutsche Bank. They are also partnered with the world’s leading data management software providers including Snowflake, Informatica & Collibra. We caught up with Sean Russell, the company's Senior Data Governance Consultant to quiz him on the complications Big Data is posing to insurtechs and fintechs alike.

By what percentage is Big Data expected to grow in the next few years - and what will that mean in terms of data gravity for the insurance industry?

“The amount of data being produced by consumers is expected to more than double by 2025. For the insurance industry, it means that the race is on to be among the first to capitalise on the potential for insights into customers, markets, products, etc. It also means there are new regulatory requirements to consider, especially in the ESG, Privacy, Security and Ethics spaces. Most importantly, it means that insurance businesses will need to see data as an asset and manage that data effectively.”

What are the main elements driving the increase in Big Data in the insurance industry - and why?

“The customer is at the heart of the insurance industry and the main driver of modernisation, including the use of big data to provide improved service to the customer. Relevant up-selling and cross-selling opportunities can be developed by reviewing data on existing customer buying habits and policy requirements.

“A better customer experience is made possible through insights gained from the review of customer interactions and transactions, including everything from call-centre interaction to top line policy information. Even new products, bundled offerings, and services can be developed using insights gleaned from data collected on existing buying trends cross referenced with geography and consumer demographics.” 

Will an increase in Big Data negatively or positively affect the insurance industry?

“Like it or not, Big Data is a fact of the current industry environment. For industry players with strong data management and governance in-place, Big Data is the ground beneath their feet, a strong foundation for strategic direction and decision making. For others, Big Data is an ocean and it’s very easy to get lost at sea. 

“For the insurance industry, how businesses use Big Data to improve and secure customer loyalty will drive customer choice and will be a defining element when determining industry leadership.”

How can companies effectively aggregate their data to maximum effect? Which technologies are proving most effective in terms of handling the data surge? Is edge computing the answer, for example? 

Regarding Aggregating Data Effectively: 

“Effective data aggregation starts with good data management. Having a strong data management programme, with an eye on the governance and quality of data and a certainty of where the best data comes from, ensures that good data is available on demand to make the best possible decisions. 

“A strong data management programme establishes a baseline for the aggregation of high-quality data to derive insights. Once that’s in place, using self-service data aggregation options is quickly becoming the standard. Setting up a space where data can be reviewed, sliced and diced, and visualised by the business.

“This is without the need for prior technical knowledge or technical resources to build temporary connections between source systems and reports. It can be a game changer and enable the insurance industry to react at lightning speed to new insights.

Regarding Technologies and Edge Computing:

“As previously stated, having a good data management programme is an essential prerequisite to making the most of Big Data within your organisation. Collibra and Informatica have industry standard offerings in governance and quality monitoring, with Semarchy providing some excellent solutions for data mastering. As with most industries, the future is cloud, and for big data aggregation and reporting, strong offerings are available. Google Cloud Platform, Snowflake, and BigID all have strong offerings in the cloud space. 

“Edge computing is an interesting opportunity, especially for areas of insurance like property & casualty (P&C), where claims information can be stored and analysed on sight, with only the relevant information making its way back to central systems.” 

With the implementation of smart cities, are these increased amounts of data collection something we should be cautious about in terms of privacy for individuals and security, given the rising number of cyber attacks and breaches?

“While smart cities are going to present valuable new ways to leverage trends and analyse large populations, it’s always essential that the individual monitors and approves the way their data is being used in terms of privacy and security, especially given the rising number of cyber attacks and breaches. 

“From an insurance industry standpoint, smart cities represent a wealth of new and precise information that can help to ensure the business is acting efficiently and comprehensively to exceed customer expectations. The challenge here is to ensure data is used ethically and that insights are gained using precisely identified and defined data. 

“For example, you wouldn’t want homeowner insurance premiums to rise astronomically because of data supporting your neighbourhood as a high-crime area only to find out that the crimes are 99% parking tickets.”

How do you see the future of Big Data developing in the insurtech space?

“Big Data is likely to will expand in ways we can’t even imagine in the insur-tech space, but as a start, the amount of data being collected and analysed will only grow. Areas of regulatory concern, such as ESG and ethics mean more data in these areas will need to be collected. 

“Meanwhile, smart devices and other technological advancements will mean more actuarial, claims and trend data. Finally, environmental, and political factors will play an increasing role in how new products and offerings are developed and marketed. It’s an exciting time to learn more about data in the insurance industry!”