Insurance Industry - Trends 5

Part
01
of three
Part
01

Insurance Industry - Trends 3

Some importance of social media listening to the insurance industry include;Sales Leads, Fraud detection, data for marketing and engagement. Examples of two companies that cited using social media listening include; Metlife and Cigna.

THE IMPORTANCE OF SOCIAL MEDIA LISTENING TO THE INSURANCE INDUSTRY.

  • Sales Leads
Through social listening, life insurance companies put insurance products in front of consumers at convenient times on social media.“People post about life events on social media and search for information about life insurance. Carriers simply need to utilize tools such as social media listening platforms to identify touchpoints and launch initiatives to reach out proactively to potential customers,” said experts at McKinsey & Company."

  • Fraud detection
Social media listening offers a cost-effective approach to reveal insurance fraud. "Someone who filed a claim for a serious injury might be running a marathon. Or someone who reported stolen property might appear in a photo with the missing item. Those types of fraudulent claims are estimated at $80 billion a year in the U.S. alone, Kumar says. Costs are passed on to policyholders in the form of higher premiums."

  • Data for marketing.
Social media listening gives a lot of insights into customers beliefs and behavior. An insurance company can monitor social media to detect how customers observe attributes like guaranteed income and lifetime benefits. Examples of two companies that cited using social media
listening include; Metlife and Cigna.

  • Engagement.
Social media listening shows opportunity for engagement. "With social listening, State Farm learned that someone had tweeted “Like a good neighbor State Farm is there… I need food.” In response, State Farm offered to send food from the Twitter user’s favorite restaurant."

Discussion on whether using social media data is a required core step that insurance companies will go through when evaluating claims.

Social media data is not a required core step that insurance companies go through when evaluating claims. Research shows that insurance companies don’t need to wait until there’s a huge amount of social media posts to initiate the claims process.

It is also important for insurance companies to use social media data when evaluating claims. "When analyzed correctly, social media data can inform a parametric insurance contract, triggering the payment of a predetermined amount when conditions exceed certain metrics, such as the wind speed associated with a hurricane or tremors accompanying an earthquake."

EXAMPLES OF TWO COMPANIES USING SOCIAL MEDIA LISTENING

We have provided examples of two companies that cited using social media
listening, these include; Metlife and Cigna

MetLife
MetLife's developed a 2-hour response policy for client issues via social media. This is an example of how "insurance companies can build policies that prioritize answering customers' needs."

Cigna
Cigna makes use of social listening platforms like Talkwalker to analyze positive, neutral, or negative sentiment toward a company. This is a way brand see the public views about a company. Cigma uses Talkwalker’s platform to benchmark their positive and negative mentions, watch for any drastic changes, and create new goals.
Part
02
of three
Part
02

Insurance Industry - Trends 4

Blockchain technologies have broad applications across various industries. In the insurance sector, they allow for seamless distribution of digital ledgers that support transactions sharing and synchronization across multiple ledgers in different computers.

BLOCKCHAIN AS A DIGITAL LEDGER

Blockchain technology ensures digital distribution and synchronization of ledgers that support transactions, data recording, and data sharing across electronic ledgers in different independent computers. The technology, which is immutable allows users to safely store data in digital ledgers. Likewise, blockchain makes processes more efficient because the information on digital ledgers becomes more accessible, resilient, and reliable. In the insurance sector, blockchain technology ensures that data on ledgers cannot be falsified; moreover, it promotes remote transactions without the use of middlemen.

BLOCKCHAIN AS USED IN AIG'S SMART INSURANCE POLICY

AIG’s smart insurance policy uses blockchain. In particular, AIG, Standard Chartered, and IBM converted a master policy developed in the UK along with three other local policies from Singapore, Kenya and the U.S. The master policy allows the three countries to view the policy data and documentation in real-time. Globally, AIG effectively made the first multinational insurance policy using blockchain technology. The blockchain technology makes it possible for companies to share data across a network of independent computers, which AIG uses to drive their "smart contracts." Also, the real-time synchronization of blockchain technology utilized in AIG's smart contract insurance policy allows companies and insurers to simultaneously share data and documentation regarding the policies.

CYBERSECURITY AND HOW IT AFFECTS P&C INSURANCE

Cybersecurity insurance was originally developed to seal the gaps of traditional property & casualty (P&C) insurance. The technology is used to minimize the impact of data breaches and cyber-attacks, which were not secured in traditional policies.

HOW CYBERSECURITY IS USED IN THE INSURANCE INDUSTRY

Despite opening other revenue streams for insurance companies, cybersecurity benefits customers more in many ways. For instance, while cyber underwriters focus more on the IT security of the companies seeking cybersecurity insurance, they raise the bar for cyber hygiene standards to qualify for insurance, which eventually encourages companies to implement policies that minimize cyber risk. Similarly, cyberinsurance shall continue trending as businesses increase their focus on cybersecurity and it is expected to move from risk protection to prevention. In closing, making a claim for cybersecurity insurance is similar to other insurance types; however, the procedure may take long because the claims amount would likely be higher than usual.
Part
03
of three
Part
03

Insurance Industry - Trends 5

According to an online report by CSO, 84% of business use big data analytics to help them foresee cyber attacks and the intensity of the attacks. Big data analytics' "predictive model and penetration testing" help them to prevent and block the cyber crimes, thus dealing with the security threats. Some companies in the P & C insurance space have incorporated the power of big data analytics into their operations. With the help of Cloudera Enterprise, Allstate has built a "centralized big data analytics hub" that allows them to analyze 80 years of historical data 75 times faster. Big data helps them perform easily and efficiently a myriad of insurance functions from risk and underwriting, getting a broader view of customer insights and reducing claims fraud. Liberty Mutual Insurance is using big data to determine if some claims should be compensated, to identify high-cost claims, and to speed up the return-to-work processes. Below is our methodology and a deep dive into our findings.

METHODOLOGY

In order to provide an overview of how big data is being used in the threat mapping of customers in the P & C insurance sector, we started our research by looking for general details on the use of big data in the threat mapping of customers. We found this article from Inventiva, which has great insights on how big data threat mapping is used in the insurance industry for social security. Next, to identify the companies that use big data analytics in their operations, we searched through the official websites of the top P & C companies. However, we could not find any relevant information.

We the searched through industry insight sources like Eagleview, Marklogic, Genre, Propertycasualty360 to get examples of P&C insurance companies using big data analytics. This strategy yielded information related to the general overview of companies and their general growth, but not how the insurance companies are using big data.

Finally, we looked for the top P & C insurers and creatively searched for any instances where they are using big data in their daily operations. We located important insights from Liberty Mutual Group View Point, Manipal Pro Learn and Cloudera on the uses of big data by P & C insurers.

Regarding trends affecting the implementation of technologies and future developments in the insurance industry, we started our research through major industry sources like Towerwatson, Hortonworks, Globalxfunds. This strategy gave us the global progress and overview of the industry, but not specific trends. Next, we scoured through some leading news journals like InsuranceBusinessMag, BizJournals, SmartInsights, DigitaListMag, and Academia. None of the news journals had information specific to trends. All we could locate was a general market analysis of the industry. Lastly, we searched for case studies and publicly available reports in Juniper, Guru99, Exastax, Capegemini, AnalyticsTraining, and Scalefocus. Through a Capegemini report, we leveraged the exact data related to the trends in the P & C insurance industry.

uses of big DATA IN THREAT MAPPING OF CUSTOMERS

P & C insurance companies can leverage big data in threat mapping. Once the customer signs up for insurance, the company has to be aware of what the possibilities are that the customer will claim coverage in case things do not go well. If the customer wants his car to be insured against accidents, the insurance company can use big data to analyze the information on places the car frequents and how prone the area is to accidents. Big data helps insurers closely monitor policy holders, analyze the customer's journey and set insurance premiums that will help them avoid losses once they indemnify the customer. Whenever there is a loss to individual or property, the situation is closely monitored before issuing an insurance contract by examining various factors related to the threat of the individual life or damage or loss of the property through available data with deep analytics. This helps reduce the impact of frequent claims, which may substantially increase social security measures.

P & C INSURANCE COMPANIES USING BIG DATA

LIBERTY MUTUAL

Liberty Mutual is using big data in the following ways:

Identifying High-Cost Claims — they use big data to create an escalation model that helps in the early identification of claims with a potential high cost, allowing for sooner intervention.

Improving Return-to-Work Processes - Liberty Mutual uses big data analytics to create a model that "differentiates simple claims from more complex cases". This will improve return-to-work efforts and reduce overall claim costs.

Determining Compensability- Liberty Mutual is using data analytics to create a highly effective compensability model, which will determine if a claim deserves compensation or not.

ALLSTATE

Insurance company Allstate has partnered with Cloudera Enterprise to build a "centralized big data analytics hub". This big data analytics hub gives Allstate the ability to "analyze 80 years of historical data across 50 states" 75 times faster. They apply big data in risk and underwriting, customer insights, claims fraud prevention, and usage-based-insurance.

TRENDS AFFECTING IMPLEMENTATION OF TECHNOLOGY IN THE INSURANCE INDUSTRY

CONNECTED DEVICES

Connected devices help P & C insurers leverage real-time data, which they use for risk mitigation and to add more value to their services. A good example of this trend in action is the partnership between Allianz and Panasonic. Panasonic sensors relay real-time alerts to both Allianz and the user's connected devices to help in mitigating damage.
HOW CONNECTED DEVICES CHANGE THE STRATEGY OF INSURANCE
According to various focus reports, the connected devices market is predicted to experience massive growth in the next few years. Statista reports that the number of total connected devices globally will grow at a CAGR of 17.8% from 20.4 billion in 2017 to reach 75.4 billion in 2025.
APPLICATION PROGRAMMING INTERFACE
APIs offer seamless integrations with other stakeholders. P & C insurers are tapping into API's potential as a game changer for the industry. Liberty Mutual's open API developer portal by Solaria Labs helps data scientists make safety apps since it combines "proprietary insurance knowledge with public data, auto theft and parking citations". GoodHome enabled Allstate to improve customer engagements and Allstate found that a user of this tool is more likely to request an insurance quote than a non-user by over 350%.

HOW API CHANGES THE STRATEGY OF INSURANCE
APIs have contributed to a conversion rate of 350% and provided fast-paced innovation that has led to cost savings. To generate more compelling insights, P & C insurers need to integrate data from various sources and third parties. Traditional insurers can use APIs to innovate faster and boost their digital advancement efforts.
COLLABORATION WITH INSURTECHS
Collaboration with insuretech companies is another trend in the P & C insurance industry. Traditional P & C insurers are partnering with insuretech firms so that they can introduce new offers to their customers. For example, Allianz partnered with Visicover to provide aircraft insurance.
HOW THIS TREND CHANGES THE STRATEGY OF INSURANCE
Collaborating with insurtech firms substantially reduces the cost of starting and maintaining an in-house R & D center for insurance companies. According to the 2017 World Insurance Report, which interviewed insurance executives, 52.9% of them expressed their willingness to partner with insurtech firms in order to leverage digital technologies, while 35.6% of the executives prefer to do in-house development.
Sources
Sources

From Part 02
Quotes
  • "Distributed ledger technology (DLT, also known as blockchain technology) revolves around an encoded and distributed database serving as a ledger (hence distributed ledger technology) whereby records regarding transactions are stored"
  • "At the core DLT is an innovative database approach with a data model whereby cryptography (encryption) is utilized in each transaction update and verification become possible across the specific blockchain network, depending on its goal and stakeholders."
  • "Over a dozen banks and institutions were involved in the development and deployment process. Cross-border payments are undoubtedly a key use case as in 2017 also SWIFT, Mastercard and the R3 consortium took initatives, the latter two and IBM did so in October 2017."
Quotes
  • "Blockchain is one type of a distributed ledger. Distributed ledgers use independent computers (referred to as nodes) to record, share and synchronize transactions in their respective electronic ledgers (instead of keeping data centralized as in a traditional ledger)."
  • "Distributed ledger technology (DLT) could fundamentally change the financial sector, making it more efficient, resilient and reliable."
  • "Eventually, DLT could increase efficiency and lower remittance costs, and potentially improve access to finance for unbanked populations, who are currently outside the traditional financial system. "
Quotes
  • "At its core, blockchain is a way to safely store data. Another name for blockchain is distributed ledger technology, or DLT, and this is a better descriptor of how the tech works."
  • "For insurance, as with most industries, the power of blockchain lies in cutting out the middleman. With so much personal data at stake, the insurance industry is currently bogged down by countless checks and rechecks."
  • "When all that information is on a blockchain, virtually all those checks can be dispensed with. Information is trusted and can flow directly from one party to the other."
Quotes
  • "Insurer American International Group Inc has partnered with International Business Machines Corp to develop a “smart” insurance policy that uses blockchain to manage complex international coverage, the companies said on Wednesday. "
  • "AIG and IBM completed a pilot of a so-called “smart contract” multi-national policy for Standard Chartered Bank PLC which the companies said is the first of its kind using blockchain’s digital ledger technology. "
  • "The Standard Chartered policy uses blockchain to facilitate sharing of real-time information for a main policy written in the United Kingdom, where the bank is headquartered, and three local policies in the United States, Singapore and Kenya. "
  • "Blockchain technology, which powers the digital currency bitcoin, enables data sharing across a network of individual computers. It has gained worldwide popularity due to its usefulness in recording and keeping track of assets or transactions across all industries. "
  • "A master policy is typically issued in the country where a company is headquartered, while affiliates often need coverage in other countries that impose varying rules, documentation, and payment terms."
  • "The real-time system allows companies, their units, and insurers, among others, to simultaneously share all data and documents about the policies, the companies said. It also notifies all of those involved about payments. "
Quotes
  • "American International Group, IBM and Standard Chartered Bank have successfully piloted what they say is the first multinational, “smart contract”-based insurance policy using blockchain."
  • "Working together, AIG, Standard Chartered and IBM converted a multinational, controlled master policy written in the U.K. and three local policies in the U.S., Singapore and Kenya into a “smart contract” that provides a shared view of policy data and documentation in real time. Third parties in the network, such as brokers, auditors and other stakeholders, can also be included, giving them a customized view of policy and payment data and documentation."
Quotes
  • "Cyber insurance as a stand-alone product began to take off in response to Y2K concerns and was designed to fill gaps in traditional property and casualty (P&C) products. The number of insurance providers offering the product gradually expanded, although it remained a niche and specialised market during these early days."
Quotes
  • "Cyber insurance is used to reduce the impact of cyber-attacks and data breaches. It first emerged because traditional insurance policies tended not to cover these sorts of risks."
  • "Typically, cyber insurance policies provide first-party coverage against losses such as data destruction, denial of service attacks, theft, hacking and liability coverage guaranteeing compensation for damages from errors such as the failure to safeguard data."
  • "A common problem with the current cyber insurance market is the lack of standard policies. While the differing terminology between vendors leads to confusion in comprehending the protections a policy can offer."
  • "Another issue facing insurers and organisations today is the lack of visibility in understanding cyber health, making it a challenge to quantify and understand premiums. Furthermore, according to a report by the insurer, Hiscox, nearly three-quarters (73%) of global firms are “cyber-novices” regarding the quality of their security strategy."
  • "According to a study carried out by Insurance Post, 2018 Cyber Insurance Survey, as the cyber insurance market develops, a cyber claims process could make or break an insurer. In the survey, firms earned a low ranking from brokers even when they had invested substantial resources into developing a cyber proposition."
  • "On the other side, the higher-ranking insurers use a claims process where policyholders are directed to incident response experts who are on hand to guide them through the process in its entirety."
From Part 03
Quotes
  • "Customer Experience Journey Mapping (CXJM) is essential to help you lay down your plan of attack and start realizing the opportunities for delivering against customer experience objectives"
  • "A CXJM is only completed by following these 4 clear stages: Stage 1 - Empathy mapping , Stage 2 - Audience interviews, Stage 3 - Mapping experiences, Stage 4 - Extracting the moments of truth "
  • "By following this approach to CXJM you can really start to understand your audience’s ‘moments of truth’ – the points along their journey that cause pain or delight."
  • "This is where overlaying a combination of quantitative and qualitative data comes into play. By adding Validate with Data into the aforementioned process (yes, it’s now a 5 stage process) means you can enrich and measure the moments of truth with some robust figures alongside the insights from the qualitative interviews."
  • "The data you use to validate the experiences can vary on a case by case basis. Good place to start with is Search data, Social data, Web Analytics and Heuristic assessments – "
  • "Search data is only ever (really) analyzed by your SEO or Analytics team. However, when using search data as part of your CXJM process, search data really is ab-so-lutely invaluable. Quite simply, this is because people tell, or ask, Google the truth"
Quotes
  • "The insurance industry experiences a flow of data from a variety of sources. Big data handles all the information that is gathered about the customers, it takes care of the data related to threat mapping of customers and also keeps a record of the customer experience."
  • "Blockchain technology is a boon for the insurance industry, which requires synchronising and liaison of multiple intermediaries for processing of large chunks of data. "
  • "Blockchain technology helps the insurance companies to improve data security. The blockchain safely records all the data of the insuree as well as his transaction details. Thus all the vital data is managed digitally in a transparent and decentralised manner eliminating insurance related frauds."
  • "Thus an industry that primarily collects or records people’s data, blockchain engineers can prove their mettle by revolutionising data storage and privacy standards."
  • "It is imperative to understand that Blockchain can securely facilitate the storage and transfer of sensitive data in various industries, but it does not generate data. Therefore, the concoction of blockchain technology with the data itself becomes a powerful combination. "
  • "Combining the knowledge of blockchain with big data will ensure that you amass relevant, credible and quality data. This integrity in data quality is what industry giants are looking for today."
Quotes
  • "Cybercrime instances seem to be breeding like rabbits. According to security software maker Malwarebytes, its users reported 1 billion malware-based incidents from June to November 2016. These never-ending cybersecurity threats make it extremely difficult to sustain business performance and growth."
  • "According to a CSO Online report, 84% of business use Big Data to help block these attacks. They also reported a decent decline in security breaches after introducing Big Data analytics into their operations."
  • "Big Data analytics programs can help you foresee the class and intensity of cybersecurity threats. You can weigh the complexity of a possible attack by evaluating data sources and patterns. These tools also allow you to use current and historical data"
  • "Intelligent Big Data analytics enables experts to build a predictive model that can issue an alert as soon as it sees an entry point for a cybersecurity attack.Stay secure and ahead of hackers with penetration testing"
  • "Employing the power of Big Data, you can improve your data-management techniques and cyberthreat-detection mechanisms. Monitoring and improving your approach can bulletproof your business. "
Quotes
  • "When an insurance agency sells an insurance, they want to be aware of all the possibilities of things going unfavourably with their customer, making them file a claim. "
  • "Setting policy premiums also becomes easy as big data provides organizations with ample information to analyze from. "
  • "When a customer wants motor insurance, for instance, the insurance company can analyze information about the areas where his vehicle travels the most and what is the possibility of that vehicle being damaged and how prone is that area to road accidents."
  • "When an insurance agency has such information available at their disposal, they can easily decide on how much premium they should charge to stay clear of any losses."
  • "Even though the insurance agencies do not sell any physical products, this industry holds importance as it helps people by ensuring them of their social security. "
  • " Organizations can look up to the use cases and learn about the ways in which big data analytics can help them. CTOs and CIOs of insurance agencies can start reading about how their agencies can further benefit from the use of big data."
Quotes
  • "That’s why Liberty Mutual devotes significant resources to developing models and analyzing claims data to: Better understand the issues involved with the worker and his/her injury, Quickly establish the most appropriate course of treatment, Assign the right people and resources to drive the best outcome"
  • "Here are three areas where Liberty Mutual uses big data to help businesses control workers compensation costs: "
  • "Identifying High-Cost Claims - The escalation alert model identifies potential high-cost claims early, allowing claims staff to intervene sooner. "
  • " Improving Return-to-Work Processes - Liberty Mutual’s model differentiates simple claims from more complex cases where medical expert involvement would improve return-to-work efforts and reduce overall claim costs."
  • "Determining Compensability., Using data analytics to create a compensability model is a highly effective way to calculate the probability of a claim being covered by workers comp."
Quotes
  • "Leading insurers of all types and sizes are increasingly embracing big data analytics and Apache Hadoop to drive growth and innovation."
  • "Deloitte, Accenture and other leading authorities says, 82 percent of insurance executives cite data and analytics as a top priority for their organizations while 50 percent indicate that analytics implementations will make use of events data streams generated by instrumented machines, applications and or individuals."
  • "Allstate – has built a centralized big data analytics hub with Cloudera Enterprise. There are multiple use cases in production today – from risk & underwriting, customer insights (gaining a 360-degree view) to claims fraud and usage-based-insurance. Value: Allstate is able to analyze 80 years’ of historical data across 50 states 75X faster."
Quotes
  • "Fuzzy logic in data science - Emotion to algorithm - Dan saw a strange connection between the Hollywood celebrity Anne Hathaway and Warren Buffett’s Berkshire Hathaway’s stock values. "
  • "Every time Anne Hathaway made it into the news, Berkshire Hathaway’s stock value went up too. Dan cross-checked the data back to 2008 to find the correlation consistent. Was Anne’s sentimental value on internet controlling Berkshire Hathaway’s stock value?"
  • "Mirvish deduced that the algorithm used by the automated trading software was unable to differentiate certain content that was generated for Anna Hathaway and was affecting the data results for Berkshire Hathaway stock values too."
Quotes
  • "Progressive Insurance is well known for its innovative use of data to better serve its customers, and the important role that Hortonworks Data Platform has played in that transformation."
  • "Data Lake Drives Progressive Insurance From Zero to Sixty"
  • " Progressive Insurance is one of the largest U.S. auto insurance companies and is committed to continuously provide fast, fair, and better coverage for its customers. Progressive is able to innovate for its customers because it innovates with its data."
Quotes
  • "Connected devices help insurers proactively mitigate risk and provide value add services. Allianz partnered with panasonic to provide better service to customers."
  • "P & C insurers realize API's importance. Liberty mutual open API portal by solaria labs combines proprietary insurance knowledge with public data, auto theft, parking citations to help scientists to make safety Apps."
  • "Collaboration with insuretech heats up. Allianz partnered with Insuretech Visicover for providing Aircraft insurance."