Blog: Working towards noble data use in insurance

Most people look to insurers for compensation when their home is robbed, their car crumpled, or their health is impacted. Customers opt into policies to protect them against life’s various risks. For this reason, the insurance industry can be seen as inherently reactionary. 

Many don’t know that smart data use can elevate insurers from those who help when everything goes wrong to those who can reduce the chances of the calamity from occuring in the first place.

Encouraging safety and decreasing risk

Technology is evolving and so too are the capabilities of insurers. For example, car insurance products on the market today don’t just monitor the miles a customer drives; they can track risky habits. Drivers who speed or break suddenly can be alerted to their behaviour with a notification. Those who drive responsibly are rewarded with lower premiums – satisfying responsible customers and making roads safer simultaneously.

Some pioneering health insurers have begun to proactively track and reward healthy behaviours through opt-in apps and wearables. If a customer’s Apple watch tells their health insurer that they are an active older person; they may qualify for discounts compared to others in their age category.

Moving from reactive to proactive approaches

Data can also grant insurers the ability to inform individuals of increased risk proactively.

Real-time data modelling can alert insurers when a hailstorm is about to sweep in, or a river may burst its banks. From here, insurers can communicate with at-risk customers, letting them know to move their cars inside, protect their valuable belongings or vacate the area altogether.

Depending on how much data consumers are willing to share – which often depends on how well the insurer communicates the value exchange of that data sharing – they may benefit in a myriad of ways. And the insurer benefits too. Companies including EXL, have been helping UK personal lines insurers to better quantify the risk of floods, fires and other natural catastrophes in order to allow for more accurate pricing.

Noble data practices build resilience

The new age of insurance will shift beyond purely reactive policies to a predict-and-prevent model. Using data in this way will help insurers to make better policy decisions and create personalised products, not merely transactional ones.

Access to consumer data – and sophisticated data management capabilities – is unlocking a new and noble purpose for insurers. Providers have the opportunity to make the world a safer place while building their resilience.

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