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Why Is Big Data Such a Big Deal for the Insurance Industry?

Posted on August 02, 2016 by Guy Weismantel in Digital Insurer

Digital Insurer blog header

For those with short attention spans, the answer to the question posed by the headline above is this: Visibility. 

If business was predictable, we'd all read the same books, use the same technology, and the markets would be stable. Things would be easy! 

But they never are. 

As hard as we try to predict the future (some of us better than others - like Warren Buffet), odds are that our predictions are nothing more than fantasies. Stories of optimism or pessimism based on emotion rather than cold, unemotional, unwavering data.   

That's why it's so rare to be right. 

I don't believe in magic, but if there was a crystal ball of consumerism, I do believe that advances in big data and analytics technology have helped us turn what was once a shot in the dark into a murky almost visible picture of what people want, how they want it, and about how much they're willing to pay for it. 

How, you ask? Let's take a closer look at how big data can provide visibility that leads to actionable insight. With a fuller comprehension of its scope, you'll gain a better understanding of its critical role in the future of your agency.

A TV With No Remote 

television remote vertafore big data analytics technology

The reality is, some of us have much clearer visions of what consumers desire than others - and the crispness of that picture is directly correlated to an organization's ability to make sense out of its data.

Imagine a TV with no remote. You sit down to watch your favorite show on Netflix (House of Cards, anyone?) and the brightness is off, skewing the color of the screen into an incomprehensible orange hue. Now imagine that instead of a brightness scale of 0-100, the scale on your TV went on infinitely in both directions. 

Without the remote you don't have the right tool to fix the problem. Even if you got up from your favorite spot on the couch and walked over to the TV to change the brightness manually, you'd be stuck in an endless loop of adjusting. Getting up, moving the brightness a tad to the right, then to the left, and back to the right - because the way the TV looks up close is not how it will appear from that warm comfy spot you just left on the couch. Perception can be a tricky thing to navigate - especially in business. 

And with an infinite scale to adjust, there is very little hope that you'll be able to find the perfect hue before the hour long show is over (your time to take action is limited!).

And we're only talking about brightness.

That's only one variable. 

When you take a step back and think about the complex business of insurance and all of the variables including the moving target that is the economy - it would be like listening to your favorite TV show. Without the visuals, you'd be stuck trying to follow the complex plot without being able to pick up on visual cues or the body language of the actors. You'd be missing out on 55% of the communication (55% of communication is non-verbal); in business, that would be like making a decision with only 45% of the data.

Would you be okay with that? 

Do My Competitors Have a Remote Control for Their TV? 

We've been doing a bit of research of our own here at Vertafore to understand just how prepared the insurance industry is to take advantage of big data analytics.

Before we take the time and energy to invest in building new tools for the insurance industry, we believe it's fundamentally necessary to understand the "why" behind bigger picture: How is this new technology going to help you accomplish your business goals? Here's what your peers have been telling us about their use of big data analytics: 


The sources for these data points can be found in our free e-book Moving your business forward with Data Analytics: Strategies and solutions to help companies of all sizes derive big value from big data

Regardless of which segment you fall into, those using analytics or not, the numbers are shocking. 

For example, only 45% of agencies are using risk analytics tools. Which means 55% of agencies are watching TV with a fuzzy picture. 39% of agencies plan to start using risk analytics tools, but that means the 16% left over are content with the status quo. I like to think of these agencies as the people who are still wasting time fussing with the antennas on top of their TV's.

No one wants to watch the big game at their house. 

If we approach the situation from the other side, the more positive side, the story is still relatively the same. 

54% of carriers are embracing big data. That's great! And there are already some pretty amazing stories about carriers using big data to create valuable change for their insureds (we'll dive deeper into this next week).

But that means half of the industry is lagging. 

Half of the industry is OK with lacking the visibility their competitors have. 

The First Steps for the Future

The gathering, management, and interpretation of data has moved out of the IT department and into the offices of the insurance industry's leaders. The term "big data" can be meaningless when used ad nauseam, but as a leader, you need to take big data analytics seriously as it pertains specifically to your business. 

Every business is different, so if you don't know how to get started, or need some help working through the later stages, download our free e-book about moving your business forward with big data or hit the contact button below and we'll put you in touch with the right people to help you accomplish your goals. 

I'll leave you with one final thought: 

How clear is your picture? 

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 Bachelors 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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