Michelman & Robinson, LLP – Overall, Big Data is slowly transforming the way insurance companies do business.
Insurers use Big Data through analytic technologies and predictive modeling to improve overall performance, obtain more accurate pricing, deepen customer relationships, and improve loss prevention mechanisms.
Big Data is information mined from structured and unstructured sources, including customer onboarding documents, customer service logs, customer-facing websites, and auto telematics. There are a myriad of facets in which Big Data can be utilized for the betterment of the insurance industry.
For instance, Data can be used to enhance the customer experience, as well as increase retention and satisfaction. Also, Data is being used to offer more personalized, tailored insurance solutions.
Additionally, Data can assist in fraud detection and prevention: insurance companies can run person-centric and claim-centric analysis by examining claimants’ behavior to determine patterns and networks of fraud.
Big Data can be highly useful in the underwriting process, by doing analyses to highlight potential red flags, patterns and anomalies. Further, it can aid in the development of profitable products, by allowing insurers to better understand risk and expose unprofitable markets.
Recently, privacy issues with Big Data have been front and center with regard to customers’ personal information. Insurers need to be certain they are complying with the Gramm-Leach Bliley Act (GLB), California Insurance Privacy Act (CIC 791 et seq.), California Privacy Regulations (CCR Title 10, § 2689.1) and California Financial Information Privacy Act (Financial Code §§ 4050-4060) that protect non-public personal information.
The National Association of Insurance Commissioners (NAIC) is also beginning to take a good look at Big Data in respect to insurers’ use.