Today 40 percent of insurers are using data to enter new markets, while 43 percent have modernized and upgraded their risk algorithms. This is according to a new report published today by Capgemini Research Institute titled, “The data-powered insurer: Unlocking the data premium at speed and scale.”
Insurers with non-traditional, real-time data sources such as telematics, wearables and social media data will be able to meet rising customer expectations of convenience, customized advice, and dynamic pricing, and compete with InsurTech companies that are able to access personalized insights. Insurance organizations that have mastered this are called Insurance Data Masters. More than 90 percent of these have reported higher premiums, improved combined ratio, and stronger net promoter scores compared to only half of their peers.
These organizations exhibit three key differences with the rest: 92 percent have a centralized governance or facilitation body, 62 percent have collaborations with InsurTechs, and 97 percent have created open application programming interfaces (APIs) to allow external parties to access their data.
The report found that insurance organizations are using data to 1) develop new solutions, 2) create value-added services to engage customers, and 3) enable unique insights into risk and its pricing. Powered by data, over 40 percent of insurers are entering new markets, shifting from protection to prevention, and revisiting actuarial assumptions. Additionally, 43 percent of them are using real-time data to update actuarial models, while around a third can use data to model new risks. However, only 18 percent of insurance organizations have both the technical capabilities, as well as culture and behaviors to support data-driven programs that derive full value from the growing volume of data.