Big data has helped the financial services industry, including the insurance industry, evolve like never before. But are insurers utilizing big data to its fullest capacity or is there scope to do more?
Disha Sanghvi asks experts if this will lead to better utilization of big data and more innovation in the insurance space
Big data has helped the financial services industry, including the insurance industry, evolve like never before. More and more traditional insurers as well as insurtech companies are using data analytics to improve customer experience. But are insurers utilizing big data to its fullest capacity or is there scope to do more? The insurance regulator has already allowed a sandbox, a mechanism to promote and facilitate innovation, and now the Reserve Bank of India has proposed a sandbox for fintechs. Disha Sanghvi asks experts if this will lead to better utilization of big data and more innovation in the insurance space.
Shivakumar Shankar, Managing director, India, LexisNexis Risk Solutions
Use big data not just for sales but also for pricing, risk assessment
Insurers are sitting on a pile of data but they are not able to use it to the maximum capacity. The reason is that not all data is digitized. Further, data that has been digitized is spread across different systems within the insurance companies, which may not be integrated. Lack of credible third-party data is also an issue. Several insurers have started implementing big data approach but only for their marketing campaigns. There is scope for efficient decisions based on big data not just in customer-facing functions like sales or claims servicing but across the insurance continuum like in areas of product development, pricing, risk assessment, fraud and management.
The challenge for the insurance industry is innovating products and distribution channels to serve new customer needs. Sandbox could help open out innovations to be tried on a smaller scale and bring in the ability to try different ideas internally and externally, and in some cases partnering with competition. In the long run, it will help bring more innovations to the market.
Abhishek Bondia, Principal officer and managing director, SecureNow.in Insurance Broker
Behaviour analysis can help customize products
Insurance products will benefit most from big data. Insurers have a handful of products in each category that are used across distribution channels. This one-size-fits-all approach fails to serve our heterogeneous population. The regulator recognizes this, which is why insurance products are identified as a category for regulatory sandbox. Customer needs, perceived value and affordability varies substantially.
There is much to learn from the consumer goods sector, where products are tailored for each customer segment. Introduction of sachets, product positioning at aisles and billing counters, and bundling and offering a bouquet of products at incremental price points are areas that have served the consumer goods sector well.
Insurers have a lot of data that is not fully leveraged. Behaviour analysis at different stages of the buying process can throw insights on factors that influence purchase. This understanding can then be used to customize products and test them in a controlled environment. Sandbox will help achieve that.
Goutam Datta, Chief information and digital officer, Bajaj Allianz Life Insurance Co. Ltd
Sandboxing will help insurers innovate and test products
The insurance industry enjoys a large amount of data. It’s been used to either up-sell or service customers better or to detect and prevent fraud. Data scientists are able to further leverage the technologies available to create enhanced customer engagement. However, the biggest challenge that, as an industry, we must aim to conquer is that of data-sharing capability and capacity within insurers. Further, we should be able to have a system towards sharing information that is within the guidelines of the privacy norms and ensuring there is no mis-utilisation of data that is shared. Big data and its benefits are huge within the life insurance segment, and while we are seeing the benefits, much more can be accomplished.
Sandboxing approach gives us tremendous encouragement to further innovate and test products and services that truly benefit the consumer. Tech-enabled services (for customers and sales force alike) truly reduce time and increase efficiencies. The next phase for us will be how to make these processes faster and simpler.
Varun Dua, Founder and CEO, ACKO General Insurance Ltd
Industry needs to do a lot of ground work to collect data
There is a long way for the Indian insurance industry to go in terms of using big data. With no physical products to manufacture, data is arguably one of the most important assets for insurers. Both, existing insurers and newcomers are developing insurance products and processes that use a large amount of data to assess the price, and to predict and prevent risks that were considered uninsurable in some cases.
The industry has to rejig the mode of distribution where most of the data should be captured upfront. It needs a lot of groundwork in terms of creating awareness among intermediaries, service providers and consumers.
Sandbox is a new initiative taken by the regulator and it looks very promising and will help insurers try out ideas in a contained experimental mode without having to go through an otherwise elaborate comprehensive process. It will also help the regulator check the benefit and viability of an idea before enabling a full launch. This will certainly accelerate innovation and help insurers deliver better products.