Other parts of this series:
Relatively modest investments in external data capabilities can generate significant returns. Sharad Sachdev of Accenture outlines seven key steps than insurers can take to establish momentum and deliver economic value by harnessing external data streams.
We have described an external data revolution that will have important consequences for insurers. One of the best things about this revolution is that relatively modest investments can generate significant returns. Programs can be designed to be almost completely self-funding.
Steps that insurers can take include:
- Gathering internal data first. Companies should first link up and tap into all internal data sources, which typically exist in separate domains for claims, policy administration, finance, billing and other functions. This is a critical first step, which should be undertaken before new external sources of data are explored.
- Identifying new data sources. Insurers can start small by exploring new external data sources that can be used to supplement existing underwriting and/or loss provision processes.
- Establishing the right environment. The most hospitable setting for dealing with new external data sources is a big data environment in which data scientists and data engineers can rapidly iterate through large data sets and look for trends and signals.
- Harnessing new devices. Drone technology may not be applicable for every insurer, but there is significant data to be harvested from telematics in automobiles, sensors in connected homes, wearables, GPS devices and other sources.
- Making visual sense of data. Data visualization tools such as Tableau, d3 and Qlik help insurers see, make sense of, and gain insights from large amounts of data.
- Building an ecosystem. Insurers need to work with external suppliers of data, but also to partner with players in other industries to create new services that can deliver value to customers.
- Decentralizing analytics resources. Analytics talent should be embedded into the lines of business so that team members can understand both business needs and the types of data, data models and analytics that can help meet those needs.
It is becoming increasingly clear that external data – combined with industry knowledge, process expertise and sophisticated analytics – will be the basis for success for insurers going forward. Insurers can start by developing a comprehensive plan and then undertaking specific, high-return initiatives such as these.
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Harnessing the Data Exhaust Stream
Read more about how external insurance data and analytics is changing everything, from pricing risk to interacting with customers.