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InsureTech: Get Ready for Big Data to Modernize the Insurance Sector

Technology and big data are coming together to reinvent the property and casualty insurance industry.

Written By

Apr 4, 2017

Late last month a tech startup, Neosurance, was selected by start-up accelerator Plug and Play to participate in its program for insurers in Silicon Valley. The three-month program will give Neosurance the intensive interactions with insurers that it needs to boost its product, an AI-powered mobile insurance sales application.

Insurers taking part include Aviva, Allianz, Markel, Farmers Insurance, Nationwide, The Hartford, Travelers, Zurich, USAA and many others.

Michael Macauley, CEO of pricing analytics provider Quadrant Information Services, said in a press release that this is just one example of a growing trend known as Insuretech, which involves using high speed, big data analytics to help insurers evaluate risk and assign rates. This could make the traditional qualifying questionnaires that insurers use obsolete, QIS stated in their release.

“Buying insurance is ridiculously retrograde, with endless questions resulting in a quote. With the use of big data, we are discovering interesting and accurate predictors of risk that do not involve asking people questions,” said Andrew Brem, chief digital officer at Aviva.

InsureTech gains speed

Interest is growing so rapidly in InsureTech that a number of trade shows and conferences have been created to support it, according to Quadrant.

In San Francisco this spring, the Silicon Valley Insurance Accelerator is sponsoring Core Systems InsurTech Fusion2. Other major upcoming events include InsurTech Conference 2017 in London in Sept. 3 and InsurTech Connect 2017 at Caesar’s Palace in Las Vegas in early October.

In the health and insurance verticals, telematics are already being used to monitor policyholder’s driving habits or fitness patterns. They’re widely accepted there, QIS said, but for other types of data there is resistance. They pointed to an incident in late 2016 when Facebook forced Admiral to abandon a plan to use the language people used in Facebook quotes to evaluate how dangerously they would drive and what they should be charged for insurance. It’s not yet clear how social media data can or will be used for risk evaluation.

Staffing is another consideration, said QIS. A recent McKinsey & Co. report estimated that automation could leave up to 25% of the insurance industry’s positions consolidated or replaced over the next decade. Yet a recent PwC survey found that 77% of global insurance CEOs see the limited availability of key skill as a threat to growth.

“As an industry—and as a society—we’re learning as we go,” Macauley said. “There are very exciting possibilities opening up, and—for privacy and other reasons—there are going to be limits to how far the exploration of those possibilities can go. We can see the general outlines of the future, but we can’t be entirely sure of the details. What’s important is to understand that our industry and our world are changing. We can’t just sit back and let that change happen to us; we need to be an active part of it.”