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Insurance has always been a data-driven industry and in recent years the volume, variety and velocity of data have become three-dimensional. There is a rich abundance of open data available online and the insurance industry is actively looking for ways to understand, utilise and benefit from it.


Ultimately, the whole industry is moving towards applying machine learning (ML), natural language processing and other modelling techniques to their internal and third-party data in support of both improving operations and analysing risk. Applying machine learning where data is collected and analysed considerably helps insurers become data-led businesses. They want to harness data analytics to improve customer experience, whilst cutting claims handling times and cost, and eliminating fraud.


In this new era of analytics, unstructured data can be harnessed and analysed for greater customer insight and experience.


Let’s review how using open data sources and ML powered analytics can help insurers’ end-customers, SMEs, to better understand their insurance needs.


Insurance providers would benefit from tools that allow them to capture social data, government data, review data and website data, analysing the different insurance needs of a business with a single click. Analytics expedite the quote generating process in an accurate way, while still providing the user with necessary support and customer service. This leads to businesses understanding more about their insurance needs and reduces the likelihood of under-insurance.


                                                                       Number of social media users in billions


How open data analytics can help mitigating fraud and risk for small businesses?


Capturing and harvesting data from crowd-sourced review websites – such as, TripAdvisor and Google Reviews – helps insurance providers in the SME space understand the amount of risk they are taking on. Online community reviews also have a growing influence. Research shows that 86% of people read reviews of local businesses and it affects their purchasing decision. In a recent SME survey by DFP,  over 50% of UK small businesses said they read customer reviews online. Defining a link between social media ratings and associated risk could help identify what targets need to be reached.


How open data analytics can tackle poor ROI in marketing


Insurers regularly miss out on underwriting opportunities in small commercial lines simply due to poor marketing. Often the advertisements are placed in low-exposure environments, or the products themselves don’t fit business needs. Fortunately, social media data provides a bridge between insurance needs and SME insurers. Marketing solutions based on insights from social data and other open data sources help to segment the target market, leading to greater returns on marketing investment.

The Boston Consulting Group estimates that by combining in-house data with customer data from new online sources, business opportunities will flourish.


Incorporating new external data would:


  • Enhance pillars of value for insurers, streamlining costs and predicting fraud;
  • Improve pillars of value for consumers, such as convenience, product selection, information and customer service;
  • Nurture customer engagement; insurers could potentially capture a prospect’s information and start the nurturing process by obtaining contact information in a GDPR complaint way
  • Increase cross-selling opportunities: through insight derived from a prospects’ website, their social media profile, reviews, their location and other recorded information on their business, insurers could expose customers to different products and heighten feelings of personalisation.
  • Augmenting underwriting and risk assessment: insights from internal and external data analysis can expedite the underwriting process. It also provides insurers with the capabilities to accurately determine how risky a new policyholder is based on current and accurate data assets.


Benefits of data analytics in insurance


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The power of big data analytics does not end with the benefits outlined, we’re only just beginning to see the tip of the iceberg. Commercial insurers have the opportunity to streamline business performance and keep pace with a vast and changing data set. It’s a win-win for insurers and the insured: customers become more engaged and respond better to their providers, while insurers benefit from greater insights and data asset to better serve small business.


Written by Anna Kurmanbaeva.

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