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What Makes Big Data 'Big' for Insurance and Beyond

Posted on August 09, 2016 by Guy Weismantel in Digital Insurer

How will emerging tech trends influence the agency management system?

Drowning in data?

Information technology research and advisory company Gartner estimates that we currently have 6.4 billion connected devices and forecasts that there will be 20.8 billion "connected things" worldwide by 2020. 

That's almost 3 connected devices for every single man, woman, and child on earth. 

And every single one of those devices connected to the internet will be collecting data. Data that we can use to make the world a more predictable place, capable of helping with everything from anticipating weather trends to predicting the best-fitting bra (yes, it's true).

Data is massive. Which, admittedly, can make it overwhelming. 

IT company Cisco Systems characterizes "big data" by volume, velocity and variety. Cisco reports there will be 7,700,000,000,000,000,000,000 bytes of data by 2017, created by products such as the 54,000 Google searches that are conducted each second. 

big data information analytics volume technology internet of things vertafore

Data is amassed via everything from emails to spreadsheets, but only 10 percent of big data is structured to be easily stored and sorted.

Harnessing big data's strength to create applications that synthesize data to produce valuable recommendations makes it an important tool that is positively disrupting industries ranging from healthcare to our very own insurance industry.

Every action you take on a website turns into a data point which can be used to improve the customer experience for you the next time you return to the site.

Every decision you make within a mobile application helps developers optimize the app.

vertafore technology internet of things big data information

Even the ingredients you use while you cook can predict what percentage of diners will find your dish to be palatable.

Data now even plays a key role in the decisions professional sports coaches make during games.

It's been revolutionary at decreasing the amount of junk mail that goes out to consumers based on their preferences and past shopping history.

Big data can even adjust prices in real time based on demand and inventory so that businesses can stay as optimized as possible.

Gartner also reports more than 75 percent of companies are investing or planning to invest in data through 2016. Businesses in in every industry are identifying data they want to monitor and measure in order to turn analytics into strategies for their organizations. The hope is to gain a competitive advantage in order to stay ahead of the competition who are not tapping into big data analytics.

As consumers of insurance increasingly turn to technology for their unique needs, insurance agencies and carriers who recognize the importance of data and how it can help them with their business and benefit their customers, can deliver better service while using innovation to drive efficiency. Here are three examples of how big data has been used in other industries to improve processes, which also have implications for big data's use within the insurance industry:

Food Gets Tastier

Lada Adamic, a computational social scientist at Facebook, former University of Michigan associate professor and lover of the culinary arts, developed an algorithm with researchers capable of predicting the success of a recipe based on the ingredients you use. It also recommends ingredient replacements based on dietary restrictions and mapped a social network of ingredients for insight as to how flexible recipes can be in terms of what ingredients can be swapped in order to still produce tasty dishes.

In the same way that Adamic's algorithm can predict the risk of using certain ingredients in regards to how delicious a dish will be, big data is transforming the insurance industry by better predicting customer risk and adjusting pricing and recommendations based on the likelihood of certain outcomes. By measuring and understanding past data, pricing models can be more accurate for companies and more cost-efficient for customers.

Grabbing Your Umbrella Is No Longer a Guessing Game

Technology and consulting corporation IBM's purchase of the Weather Company in 2012 may have left some people scratching their heads. But considering the volatile state of weather and its implications for everything from residents' safety during natural disasters to how people should prepare to dress each day, the purchasing decision to meld technology with something that affects every human makes perfect sense.

In addition to using technology to make better weather predictions, CIO magazine reports the Weather Company's platform allows IBM to work on predictive applications for sectors including energy, retail, healthcare, and more. 

In much the same way past weather patterns are used to predict developing conditions and alert areas to possible natural disasters, predictive modeling and profiling can help stop the damage fraudulent claims can cause within the insurance industry. Uncommon characteristics can pop up in new claims to alert agencies there's a need to investigate the claims further. Not only does identifying fraudulent claims early on alleviate the harm the individual claims would cause, big data can also help insurance agencies pinpoint potential networks of individuals or groups carrying out larger scales of fraudulent behavior.

Your Favorite Store Already Knows You're Pregnant

Living up to its name, household goods store Target is right on target when it comes to predicting significant life events such as pregnancy or impending nuptials. The New York Times Magazine reports the store uses customer data to identify when customers are pregnant in the second trimester - the time when they're most likely to shop heavily for baby goods - and uses that knowledge to send the customer relevant marketing, including coupons for baby goods. The store is able to do this with the rich data provided in each customer's "Guest ID," which contains info on everything from survey answers to pages the customer has visited on the website.

This type of marketing mojo is also extremely helpful to the insurance industry when they're targeting insurance types for potential customers. Data gathered from social media activity, survey feedback, telephone conversations, website activity and email responses helps agencies to better offer products and services their customers or leads are more likely to be interested in. This type of data can also help insurance agencies predict when customers are close to leaving, so they can target them with marketing offers that help convince them to stay.

The world of big data is an exciting, and highly customizable one. Utilizing big data allows companies to improve their products, deliver increasingly personalized customer service, and send highly relevant marketing messages to leads and customers.

If you're interested on the potential of big data to transform your business, download our free e-book to learn more about how to get big benefits from big data. 

Guy Weismantel

Mr. Weismantel is the Vice President of Marketing at Vertafore. With 20 years of marketing and financial leadership in companies such as Microsoft, Business Objects, Baxter HealthCare, Caremark International, and Expedia, Guy’s career has focused on bringing differentiated products to market and providing the “compelling reason to purchase” for customers and prospects alike.


Guy has a Bachelor's Degree in Accounting from the University of Notre Dame, and a Masters Degree in Business Administration from the Kellogg School of Management at Northwestern University.

 

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