For insurance corporations, the use of data has not changed in any way for the past couple of decades. Since the inception of new technologies like the internet, the internet of things, and machine learning the volume and analysis of data has increased tremendously. Why does Insurtech have the ability to screw up the heart of insurance?
Insurance is Data-Driven
Incumbent insurance companies source for historical data concerning loss frequency as well as damage levels. Making use of this data isn’t new to risk carriers. They assess the risk on the basis of provided data, make decisions and underwrite profitable risks. However, the new possibilities in data analysis are driven by two fundamental changes.
Novel Sources of Insurance Data at Hand
Insurtech startups are currently gaining new acumen from modern sources of data. Geo-coding is bolstering a better understanding of geographic proximity to potential risks. Personal buying patterns in online-shops, social and multi-media consumption, usage of the Internet of Things devices, social media usage, and credit scores have proved to be an invaluable source of insights.
The possibility of obtaining new insights from modern data sources and the amalgamation is real. But a good number of risk carriers still struggle to exploit their legacy data which in most cases remain unstructured, disaggregated and distributed in silos.
Modern Data Analytics Provides Unrivaled Insights
Insurtech startups are intensively looking for ways to make historical and new data sets usable with extensive analyzes. This enables the identification of even more profitable policyholders by taking economic risks, detecting fraudulent behavior and increasing cross-selling. It is possible to anticipate the needs of customers, to provide them with the service they want and when they want it. Data and analysis are the competitive digital weapon in insurance.
Analytics and Data Emerge as a Digital Weapon in Insurance
The traditional approach to risk assessment, which is based solely on historical record, will no longer have the desired economic success.
The heart of the insurance business is made up of two vital elements: data and analytics. With this in mind, Insurtech startups are starting to put new technologies into their service and begin to leverage data and analysis to their economic advantage.
Analytics and Data Are the Soil for Insurtech Startups
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