Other parts of this series:
- Data monetization – the next oil or fool’s gold?
- Insurtech firms could help carriers unlock vast data profits
- Five smart tips for successful insurtech partnerships
- Partnerships are the key to insurance data monetization
- Veracity is critical to the success of insurance data monetization
- Carriers must keep agile to stay in step with data laws
- Bold insurers are taking the lead in data monetization
Digital fragmentation is an obstacle to insurance data monetization, but it doesn’t have to be a barrier.
The introduction of new data protection legislation in Europe has shown how international laws and regulations can have a huge impact on companies’ data monetization initiatives.
Multinational insurers looking to monetize their data need to be constantly ready to adjust their systems and processes to comply with changes in local data laws and business regulations. Furthermore, they must continually work to build trust with their customers and demonstrate that they are ethical and prudent in their use of the information they hold.
Companies operating in Europe had to amend many of their in-house practices and customer service contracts to satisfy the new General Data Protection Regulation (GDPR). Drafted by the European Union, the GDPR aims to safeguard the personal data that companies gather, store and share.
While costly and burdensome for many multinational insurers, the new legislation had the positive effect of standardizing data protection requirements for companies operating in countries within the European Union. Disparate national laws and regulations are among the big stumbling blocks to successful data monetization. They increase complexity and costs.
Although the GDPR has introduced some consistency in data protection legislation in much of Europe, multinational carriers still have to contend with plenty of local laws and rules that hinder their efficient collection and application of data. Recent stand-offs in global trade and attempts by national governments to protect jobs and intellectual property have added to these constraints. It’s disturbing that the number of trade and business restrictions adopted by members of the G20 forum has increased about four-fold in the past 10 years.
The rise in barriers to globalization has resulted in what we term “digital fragmentation”. Organizations have had to replicate the data they hold, as well as the resources they use to gather, store, manage and share such information, to comply with a multitude of different national rules and requirements.
Our survey of more than 400 global CIOs and CTOs found that 54 percent of these executives expect increasing barriers to globalization to compromise their ability to use or provide data analytics services across national markets. A slightly larger proportion believe governments around the world will strengthen their control over the transfer of data across national boundaries.
Digital fragmentation is without doubt a hinderance to data monetization. It doesn’t, however, have to be a barrier. Big insurers, and other multinational companies, can take steps to overcome digital fragmentation. Here are four key initiatives:
- Adjust strategic planning. Determine whether current strategic planning approaches can accommodate the threats posed by digital fragmentation. Important considerations include the scope of the company’s geographic footprint, the allocation of resources across different countries, the distribution of global services, and the presence of the organization in uncongenial markets.
- Assess data flows. Identify potential threats to the flow of information to, within, and out of the organization. Gauge the influence of cross-border regulations on business models and growth plans.
- Strengthen local operations. Increase participation in the economies of key markets by developing local talent, strengthening ties with nearby technology partners and working with national policy-makers to guide future legislation.
- Turn to technology. Look to emerging technologies to provide solutions that can overcome digital fragmentation. Artificial intelligence could help firms navigate limitations on the use of imported skills, for example, while blockchain could provide more secure and distributed transaction systems.
In my next blog post I’ll identify some of the key questions insurers need to answer before they embark on data monetization. Until then, have a look at these links. I’m sure you’ll find them useful.