Other parts of this series:
The Spatial Risk Diffusion Model is a new risk assessment tool – developed by Accenture Analytics and the Stevens Institute of Technology – that would allow carriers to gain a competitive advantage against the digital disrupters entering the insurance market. With this tool, insurers could see the impact that human behavior has on the progression of risk throughout society, identify which population groups influence others and determine how long before that influence spreads.
We believe carriers should immediately begin building the behavioral-assessment capabilities they will need in order to apply the spatial risk diffusion concept—within the existing insurance regulatory framework—as they select risk and seek pricing insights. As Accenture suggests in its report, Spatial Risk Diffusion: Predicting the Propagation of Risk Linked to Human Behavior, carriers should consider:
- Identifying the data points of most value and with the highest predictive potential. Insurers have data that digital disrupters do not, and it could be even more powerful when combined with emerging data sources and new analytical techniques. For example, insurers already are experiencing the risk-assessment benefits of connected home, automobile and health risks. Insurers also can identify the progression of risk as a function of human behavior in many other lines of coverage, including workers compensation, employers’ liability and burglary.
- Incentivizing customers to share personal data that would provide additional insights about their behavior. The Accenture Consumer-Driven Innovation Survey shows that 78 percent of insurance customers globally would be willing to share personal information with their insurers in return for benefits, like lower premiums or quicker claims settlement.
- Partnering opportunities. Now that we see the merit of applying the spatial risk diffusion concept in an insurance context, our next step is developing a full-scale model that marries granular geographic and socio-economic networks with claim data. That model would be for a specific line of coverage, such as workers compensation or automobile. Accenture invites insurers to contact us if they have any interest in participating in this project.
To learn more about the study, download Spatial Risk Diffusion: Predicting the Propagation of Risk Linked to Human Behavior.