Why Insurers Need to Start Harnessing The Power of Data

In this piece, Gerry Goodwin, Sales Director, Dufrain, looks at how data needs structure and relevance, before you slap that automated software solution onto it.

If we rewind ten years, everyone was talking about AI and automation. Business as we knew it was about to be revolutionised as machine learning technologies stole the show and promised efficient, data-driven insights to vastly improve decision making in the insurance sector.

But the results so far have been less tangible than anticipated. Instead, insurance businesses are beginning to recognise that they cannot reap the benefits of AI without having their data in order. The conversation has shifted as businesses seek to implement a robust data strategy to harness the power of their data properly.

With the pandemic only deepening the divide between the businesses that can use data to its full potential and those that cannot, insurers now need to look inwards and understand what changes they need to make to ensure they are not left behind.

What’s the hold up?

The two main hurdles businesses face on their data journey are data silos, and unstructured data.

A data silo is a group of data that is accessible by one department, but isolated from the rest of that organisation. Unfortunately for those working in the insurance sector, insurers are plagued with this issue. Many businesses still use Microsoft Excel for their data collection and reporting which often means the data can’t be accessed by other areas in the same company. Data on one customer has to be rekeyed over and over again, so as well as reduced efficiency and missing out on crucial consumer insights, siloed data can cause fatal errors for a company.

Unreliable data such as this can’t be used as part of business level decision making, resulting in poor outcomes and loss of income. We’ve also seen a number of high-profile acquisitions fail because of these data silos, as parent companies don’t have the infrastructure to harness the benefits of the new company and bring the additional value to fruition.

The second problem we commonly see is unstructured data. There are two types of data: that which can be understood by a computer, and that which cannot. The latter is what we call ‘unstructured data’ and is often stored on paper, in PDFs or in emails. This data source is an invaluable supply of customer information not yet properly harnessed. As well as a being a missed opportunity, it also presents a serious risk for businesses from a compliance perspective.

These problems are only exacerbated over time as businesses grow and their data sources build. While the challenge is becoming harder to overcome for some businesses, others are beginning to reap the benefits and gaining a competitive edge.

Taking the first step

In order to compete, it is vital that insurance businesses design and implement a data strategy to leverage information and meet their goals. By ensuring that all data is known, managed, measured and quality controlled, a business ensures that their data is “owned” and that everyone understands how data flows through the organisation, which is increasingly vital in today’s digital landscape.

Once these basic building blocks of data governance are in place, companies can start to interrogate their data for strategic benefit, such as offering a wider range of products, more personalisation to customer needs, and automated processes to facilitate reinvestment.

Preparing for the future

Looking ahead, the benefits of data-driven decisions are clear cut. They give organisations greater flexibility, a competitive edge, and more opportunities for diversification; by becoming truly data driven, insurers can roll out new products to target sectors or customer demographics in a fraction of the time it previously took as well as maximising cross and upselling opportunities across all business lines.

It’s a knock-on effect. With better data comes better insights. Better insights allows for more effective automation. Automation frees up workforce capacity and more capacity means smarter thinking and bigger opportunities. Insurers can no longer afford to ignore it.

About alastair walker 12574 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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