As the insurance industry seeks to adapt to the technology-driven landscape, it must learn to harness the large amounts of data it naturally holds. However, that is a daunting task where many insurers tend to struggle.
To gain more insight on how insurance industry members can navigate the tricky space of big data analytics, Insurance Business spoke with Vikram Mengi, co-founder and CEO of Latize, a Singapore-based data technology start-up. Latize has worked on data analytics projects with several major Singaporean insurance players, as well as non-insurance entities such as NETS and Singapore’s Economic Development Board.
Customer Loyalty
According to Mengi, in a highly competitive industry such as insurance, customer loyalty is of the utmost importance. In turn, he believes having a solid grasp of customer data is critical in building loyalty, citing a report by
Accenture which found that competitive pricing, data collection transparency, value-added benefits and personalisation of services are key to gaining customer trust and brand loyalty.
“By collecting data systematically and applying artificial or augmented intelligence, insurers can emulate players in the retail industry and offer their customers bespoke offerings,” Mengi said.
Furthermore, Mengi added that customer loyalty can also benefit insurers through investment recapture. As investment products reach maturity and are paid back to the customers, much of the money flows out of the organisation, and the customers may reinvest the money elsewhere. But if sufficient customer loyalty is built, then the customer is more likely to choose to reinvest the money in the same company. Analytics can help by showing insurers which policies are reaching maturity and what exactly these customers would be interested in reinvesting in, he said.
Personalisation
As the insurance industry begins to adopt data analytics in a deeper way, we can expect a more customer-centric approach to business, Mengi said.
“Customers look to their insurers to recommend them products that best suit their needs, but insurers themselves may not have a 360-degree view of their customers due to the highly-fragmented nature of data that they have on them,” he said.
Through data analytics, customer data and product information can be combined into a cohesive knowledge base, while smart recommendation algorithms can then leverage this knowledge base to propose what the customer needs.
Pitfalls
Mengi pointed out the following mistakes that insurers and intermediaries dabbling in analytics should avoid:
- Using multiple tools to clean up and process data
- Not leveraging data that they already have
- Engaging too many data scientists and analysts
- Not unifying information within data silos
- Not reconciling data from multiple sources
Answering unasked questions
Sometimes, the insurer has an end goal in mind, but is unable to identify what data to look at in order to arrive at the goal. Insurers hold mountains of data, and it can be confusing. To this, Mengi presented a solution.
“To achieve this, Latize’s Ulysses data platform transforms masses of enterprise data into a set of fluid, interconnected, and most importantly - easy to understand data points,” he said. “This transformation infuses intelligence into the data that allows the data platform to provide answers to questions, even when the user does not know exactly what to ask.”
Looking to the future
Mengi shared that the event most likely to cause disruption is the potential entry of big technology companies such as Google and Amazon into the financial services and insurance fields.
These tech giants have far deeper experience in big data than financial services companies and scale effects will make it difficult for financial institutions to catch-up, he said. As a result, financial firms are partnering with technology firms to provide several data and analytics functions. But if the large tech players become direct competitors by entering financial services, the field will be lopsided in their favour.
Another trend Mengi sees is that of digital insurers purchasing traditional insurers, such as Singapore Life’s recent acquisition of
Zurich Life Singapore. Digital insurers have the advantage of using technology to streamline applications and claims, and also to keep premiums low, he said.
“Insurers have troves of untapped customer data that could hold the key to driving their growth and business, and also ensure that they remain relevant in an age of technological innovation and disruption,” he said. “The rise of insurtech has gone hand in hand with insurers spending more on technology, especially in segments like data analytics. In years to come, an insurer’s success will be underpinned by their ability to leverage technology.”
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