If asked, most people could probably tell you why oil is considered so valuable.
Yes, it plays a crucial role in nearly every part of our daily lives, but it’s also kickstarted so many innovations that could never have otherwise been realized. In the digital era we live in, there’s another resource whose value is similarly unquestioned: data.
In the same way oil fuels our cars and homes, data is the catalyst behind the next generation of innovative solutions like AI and blockchain. Consequently, some industries and companies have already recognized data’s current and continuing value. Intel, for example, now leverages data to find new ways to grow its business in the wake of declining PC sales. However, data’s worth isn’t exclusive to the tech sector. Other industries — namely insurance — also stand to benefit from the myriad innovative solutions data brings to the table.
Adopting data-driven strategies has the potential to revolutionize insurance, providing paths to greater operational efficiency, better claims processing, and more precise risk appraisal. Going forward, those that can harness data’s power to fuel every aspect of business can have a leg up on their competition, while those who stick to older methods will quickly find themselves on running on fumes.
How Data Consortiums Can Fuel Insurers
With data’s importance to the future of insurance already well-established, how can insurers effectively incorporate it into their respective workflows? Traditionally, underwriting and rating decisions utilize aggregated datasets that identify trends, yet don’t offer micro-level information that can support real-time decision making.
Primary data sources, on the other hand, help paint a clearer picture of customer behavior. It’s why many companies that rely on these large datasets look for transactional and behavioral data to supplement the information they already have. Thankfully, primary sources are more readily available than they used to be, meaning insurers should theoretically be reaping the benefits of more granular data.
However, a Valen Analytics study discovered that 60 percent of insurers already deal with lengthy production backlogs and difficulty finding analytics talent, proof that data offers new and unique efficiency challenges that most insurers aren’t ready to tackle. For one, the sheer volume of sources makes picking the optimal repository a daunting task; additionally, sifting through these numerous sources can exhaust an already overextended Analytics department.
These issues — and others — cause headaches that many insurers are ill-equipped to deal with, leading many to stick to the old, manual way of doing things. This is where data consortiums come in to be the jolt an operation needs.
Make Your Insurance Operation Go
Consortiums have long existed in other industries and are gaining traction in P/C to manage and assess large pools of shared data, then offer this information to insurance companies. This takes the administrative and IT burden off insurers’ shoulders, while still providing all the requisite value.
Insurance companies don’t necessarily have to be data barons to reap the benefits of more accurate claims and better underwriting. To take advantage of the fuel that will drive the insurance industry in the future, insurers should look into what a data consortiums could do for them.
Data is the here and now for forward-thinking insurance companies. Read Valen Analytics’ 2019 Outlook Report to learn more about where this invaluable resource will take the industry in the coming year (and beyond).