WIREDGOV

The potential of big data to deliver real customer benefit in the insurance sector is still emerging.

One of the opening observations at the recent ABI Big Data & Insurance conference was that insurers are now trusted less than banks and even Estate Agents. New technologies, however, offer a wide range of opportunities to address that trust deficit and to better serve customers; crucial in an industry where the touch points with customers are, unless there is a crisis, few. In the cycle of buy, renew and, possibly, claim, there is a great deal of room for improvement.

The use of big data will play a large part in that potential improvement; including the development of more advanced and personalized services, the potential to lower customer premiums and/or ensure appropriate coverage and, most importantly, improve the products on offer. As was explored by a wide range of speakers across the day, the promise of data analytics was just beginning to be understood and applied in the insurance sector. As one speaker noted, this was balanced by the need to be aware of the potential downside, where 'Big Data', in the mind of the consumer, becomes synonymous with 'Big Brother'.

As noted by a number of participants, there is a crucial responsibility for insurance companies to work in line with informed and consenting consumers. It is also incumbent on insurers to bear in mind the fundamental role of insurance in mutualizing risk and to avoid the dystopian outcome of creating a pool of uninsurable consumers. Where the use of big data and data analytics enables such a fine tailoring of products and the identification of risk, the notion of pooling risk across large groups of people can be challenged. Access for vulnerable groups to suitable insurance products could fall and due consideration and care needs to be given to those groups of consumers. Technology may well pose ethical, moral and legal questions that need to be addressed industry wide and addressed in the regulatory framework.

The opportunities identified for the insurance sector across the day were numerous and exciting. A good use of data creates a role for insurers to incentivize positive lifestyle changes and informed decision-making for consumers. New technologies create many opportunities to better serve customers. A connected device, for example, would enable an insurer to respond to incidents even before they had been reported, ease the customer journey and, potentially, reduce costs. A model of the insurer in a more advisory role emerged during a number of panel discussions.

Many of the themes covered during the course of the conference are issues that the techUK Financial Services & Payments Programme has explored in depth as part of our ongoing focus on the insurance Industry over the past year; including Improving Customer Engagement, The Challenges of Legacy Technology in Insurance, the Value of Big Data in Combating Fraud, The Real-Time Insurer and supporting the growth of a market for Cyber Insurance. Topics of future techUK sessions, particularly with regards to the transformative impact of the Internet of Things on the insurance industry, featured prominently during a number of panels and speeches.

The notion of the insurance industry being ripe for disruption and change were key themes across the day; topics that techUK and its members are well placed to explore as part of our ongoing series on insurance. As noted by Lisa Moyle, 'as we have seen elsewhere in Financial Services, technology is driving some exciting and potentially transformative changes across the sector. The potential of big data to deliver real customer benefit is still emerging but with the proper regulatory framework in place, the opportunities are there for the taking. Whether that will come from the incumbents or challengers remains to be seen'.