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Expert Roundup: How Will Big Data Impact the Insurance Industry?

Posted on October 06, 2016 by Daniel Taibleson in Digital Insurer

expert round up vertafore big data analytics

Big data in insurance expert roundup

We spent the last two months focusing on the intersection of big data analytics, insurance, and technology in order to shine a light on the disruptive changes that are taking place in the industry. Vertafore did a lot of primary and secondary research in order to produce our free e-book on big data analytics and share our perspective, but we also think it’s important to provide you with the perspective of other influential members of the insurance industry.

So we took to Twitter and posed influencers with a question:

What role will big data play in disrupting the insurance industry -- will the insurance industry be disrupted by big data? If not, what do you think what big data's biggest impact will be?

Their answers are below.

Take a look at what they had to say. Do you agree? Do you disagree drastically? Let us know on Twitter – just tweet your comment and use the hashtag #disrupt16.

Expert round up

“SMA has done extensive research and strategy work on big data in insurance. The top areas for disruption are pricing, customer segmentation, actuarial analysis, risk analysis, and claims fraud. At least one-third of the insurers we have surveyed believe that big data will be a game-changer in these areas.”

- Mark Breading, Partner, Strategy Meets Action


Insurance has always been about data, science, zeros and ones. Now there is all this new data around us; whether new streams of data originating from social platforms and connected devices or the more traditional sources of data originating from public and private records. And there's tons of heat on how to apply analytics to uncover simple yet actionable data. The latter is what will turn data into information into discovery of new markets and products that will ultimately differentiate between winners and losers. Taking a space back and looking at insurance from a bird's eye view, we are in a highly-fragmented and competitive industry. Big data in itself is more noise. It's the information piece that's impactful. Obviously the road to actionable data will entail kissing many frogs and so  being first-to-data is a huge advantage. Insurance startups like DataCubes and Carpe Data are an example of how carriers can access new datasets in their path to profitable segments and we all know that in insurance, not all clients are created equal. All in all, the area of Big Data is as much art as it is science and insurance is about to get a lot more entertaining.

Recommend reading: The End of Insurance as We Know It

- Shefi Ben-Hutta, Founder, Coverager & Insurance Entertainment


As new sources of data about the people and things we are insuring become available, we gain new opportunities to identify and manage risk. In many cases, we can incentivize customers to play an active part by sharing data and, based on the insights from that data, modify their behavior to reduce risk. It’s a fantastic model for the insurance industry, one that offers greater transparency and value for all stakeholders.

Recommended reading: The Internet of Things: Where Telematics and Big Data create huge opportunities and Insurance Connected: Telematics Data and the New Insurance Engagement

- Andrew Dart, Head of Australia & New Zealand, The Digital Insurer

A deep look at big data and disruption

One influencer in particular, Chris Cheatham, CEO of Risk Genius, provided us with his more comprehensive view of big data, disruption, and its impact on the insurance industry. Instead of breaking this into 2 different articles, I thought we could go ahead and share Chris’ thoughts below.

chris cheatham risk genius vertafore big data analytics expert round up

What role will big data play in disrupting the insurance industry -- will the insurance industry be disrupted by big data? If not, what do you think what big data's biggest impact will be?


I bristle when I hear someone say “the insurance industry will be disrupted.”

Maybe its semantics, but I don’t anticipate entire swaths of the industry dying.

Will Big Data and Insurtech create a tidal wave through the insurance industry, knocking out incumbent corporations? In short, no. Will it completely transform industry processes and methodology? Absolutely. To really understand that answer, let’s unpack the question.

Throughout the history of the insurance industry, new technology has emerged that has changed the manner in which insurance instruments are placed and executed, but nothing -- even modern computing -- has completely blown away the industry or its major players.

Contemporary Insurtech, including the use of Big Data, will again transform the industry’s processes, but I don’t foresee an Uber-like scenario where a slick app appears on the scene to put AIG out of business. Heck, even Uber hasn’t completely eliminated taxi cabs; instead taxi cabs have adapted by adopting new technology solutions in order to compete.

I am positive that insurtech and new capabilities in harnessing Big Data will holistically transform -- or disrupt, if you will -- insurance practices and processes. Rather than wiping insurance companies out, Big Data will enhance the methodology in which they conduct business. 

What is Big Data?

I recently found myself in Silicon Valley, speaking with a professor at Stanford Business. As we chatted about insurtech (what the kids are calling new-fangled insurance technology), he made a comment that hit the nail on the head:

“Data is a commodity.”

A commodity is a raw material that is bought, sold and traded, and can be processed to provide a valuable function. First, however, it must be accessed, by harvesting, mining, excavating or whatever means necessary. Insurance data is a commodity. The mass amounts of data owned by insurance companies after centuries of accumulation are valuable for more applications that we even know at this point. This data, however, is sitting in vaults in raw form and has to be accessed or mined to be of any value.

The access and mining is the hard part. In the past, the amount of insurance data being generated increased exponentially each year. Insurance companies first had file folders, then slick new software platforms that all created reasonably manageable systems for accessing, searching and processing their data. But then the internet happened. All of a sudden, data creation exploded. The amount of insurance data being generated and stored started increasing year-over-year. Meet Big Data.

Insurance companies are sitting on proverbial gold mines of data that they have acquired over years of applications, policies, claims and actuarial research. But, for the most part, companies are unable to do anything with that data. This historical data was used for its primary purpose and then...nothing.

Machine Learning will Disrupt the Insurance Industry’s Processes

I believe the disruption will occur when insurance companies can finally wrap their arms around this Big Data with tools that equip them to access it and meaningfully analyze it. I believe, however, that the disruption will not blow away insurance companies or providers, but rather transform their processes and enhance the way they do business, place policies, and provide products.

Human beings alone can’t wrap their arms around Big Data; insurance professionals need help.

Up to now, insurance companies were bounded by rule-based software solutions that could only wade through the data in linear searches. More importantly, insurance companies were bounded by the knowledge stored in the brains of their workers. Both rule-based software and brains are limited by a human being’s ability to keep track of rules and glean insight from data.

Machine learning can create and track thousands of rules based on insights observed from Big Data.

Let’s look at a simple, non-insurtech example.

Imagine you buy a California mango at the market. The mango is sweet. You go back the following week and buy a Mexican mango; it is tart. Now you have two rules to track to determine the type of mango you are buying. It’s easy to keep track of two mango rules; but what if you have 1,000 or 1,000,000 rules that you need to create and track?

Realistically, a human cannot do this. Machine learning can.

With machine learning, the consumer can input mango characteristics and algorithms will spit out rules to predict future characteristics of mangos. 

That’s what makes machine learning so beneficial to insurance, where companies are sitting on millions of policies full of hundreds of millions of data points. 

Machine learning is the best way to glean insights from these insurance policies.  Machine learning-based platforms allow insurance companies to leverage the full potential of this data by providing the toolbox of capabilities needed to meaningfully search, analyze and utilize the overwhelming volume of data points.

So, fear not. Big data will not put your company out of business. However, it will most definitely put antiquated, friction-causing insurance workflows and processes out of business. 

- Chris Cheatham, CEO, Risk Genius

Disruption = good news for the insurance industry

If I’ve learned anything from what these experts had to say about big data and digital disruption, it’s that the insurance industry should be excited.

excited gif vertafore big data analytics expert roundup disruption

Excited about the opportunity to get a better understanding of our customers. Provide our customers with better experiences. Build better relationships with customers.

Relationships build trust, and trust drives revenue!

Going back to what Chris said above, wouldn’t we wall like to have a little less friction in our lives? At our jobs? Better technology really just makes room for more human connection and interaction allowing us to build better relationships.

Only time will tell how things play out, and there are many factors to consider, barriers standing in the way, but one thing is extremely clear, technology is changing the way the insurance industry is conducting business, and that change will only continue to accelerate.

Working through change can be difficult – but it has to be done. Vertafore is trusted by the largest customer base in North America because our products are built for insurance and we understand what it takes to be a partner that can help you navigate change. We’ve been doing it for over 40 years. If you’re interested in learning more about what kind of solutions we offer or how we can help, please don’t hesitate to reach out using the contact us form below.

For others who are more focused on the topic of digital disruption and the insurance industry, please head over to our resource center where you can download all 4 of our free e-books on the most important disruption topics: Managing your agency workforce, exceeding customer expectations, big data analytics, and improving your sales performance.


(image credit: Micah Barta)


daniel taibleson vertafore big data analytics expert roundup

As a content marketing manager at Vertafore, Daniel acts as the Editor-in-Chief of the blog, uncovering and telling stories about the intersection of insurance and technology.


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