To gain new insights and a new competitive edge, it’s time for insurers to take the plunge into the world of external data streams and more sophisticated analytics.

Taking advantage of new data streams doesn’t have to be a hugely expensive proposition. One of the best things about the data revolution is that even relatively modest investments can generate significant returns for insurers.

For insurers who want to harness the power of external data streams and build economic value, we’ve identified seven next steps:

  1. Gather internal data first

Before they explore external data, companies need to link up and tap into all their internal data sources—these typically exist in separate domains for claims, policy administration, finance, billing and other functions. Internal data can be combined with new analytical techniques such as spatial risk diffusion to rethink pricing approaches and develop new approaches to risk-assessment.

  1. Identify new data sources

Insurers can start small by exploring external data sources that can supplement existing underwriting and/or loss provision processes. By importing the data into a sandbox environment, companies can experiment, test and learn from the data. But insurers do need to be careful that they don’t violate any terms of service for data usage, and that they hold their customers’ privacy in the highest regard by only using aggregated data and taking similar measures.

  1. Establish the right environment

The most hospitable environment 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 looking for trends and signals. Our Accenture Insights Platform, which is an example of such an environment, combines market-leading tools and external data sources such as Enigma, to enable insurers to quickly and efficiently harness business critical information to make smart, strategic decisions.

  1. Harness new devices

In 2015, ten insurers received permission from the Federal Aviation Authority (FAA) to experiment with drones. Drone technology may not be applicable for every insurer, but there is significant data to be harvested from new technologies connected to the Internet of Things—ranging from telematics in automobiles, to sensors in connected homes, to wearables, to GPS devices.

  1. Make 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.

  1. Build an ecosystem

Insurers need to work with external suppliers of data, but they can also partner with players in other industries to create new services that can deliver value to customers while helping all involved build a lasting competitive advantage.

  1. Decentralize analytics resources

It’s essential to embed analytics talent deeply into the lines of business so that team members can develop an understanding of both business needs and of the types of data, data models and analytics use cases that can help meet those needs.

External data—combined with industry knowledge, process expertise and sophisticated analytics—could clearly transform the industry. Will you be one of the new crop of pioneers, surging ahead of the competition to stake your claim in the digital arena?

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