Analytics for Insurance. Tony Boobier

Чтение книги онлайн.

СКАЧАТЬ four groups of countries represent approximately 90 % of the insurance market as we currently know it. It is possible to identify some correlations between these territories, for example by contrasting growth markets with mature markets, but even these generalizations can be misleading as they can fail adequately to reflect the cultural and economic differences which prevail across vast regions.

      1.2.4 Analytics and the Internet of Things

      By 2020, everybody will have 5.1 connected devices, according to one management analyst and Gartner indicate that there will be 15 billion networked devices, many of which will be able to communicate with each other.

      The concept of ‘Smart Devices’ isn't new, in fact starting off 20 years ago. High tech manufacturers such as LG and Samsung already offer ‘internet-enabled refrigeration.’ It is already possible to control the central heating remotely, and turn the lights off and on (or even just dim them) using an android phone. The increased popularity of mobile devices such as ‘Fitbit’ and ‘Jawbone,’ amongst others, is leading fashion companies and watchmakers to consider embedding devices in attractive jewelry and timepieces. We are rapidly entering the period of the Internet of Things (‘IoT’) with significant future impact on the insurance industry.

      What are the consequences for insurance and insurers? Can we see over the horizon something which we might call the ‘Insurance of Things’ and if so, what is this and what will be the consequences? There is no doubt that Big Data and Analytics will play a part in this new environment. Enormous amounts of data will be created, analyzed and interpreted.

      The use of connected devices is not entirely new in the insurance industry. The initial focus seems to have been on personal lines but will the next big wave of innovation find itself in the commercial sector? Whilst much of the focus has been on personal vehicle telematics, this is readily extended to vehicle fleet insurances. Some insurers have already obtained indirect benefit from a broad range of technologies from RFID (‘Radio Frequency Identification’) tagging of container shipments to monitoring of supply chain conditions to ensure fresh produce.

      The Internet of Things in an insurance capacity will be considered later but starts to open up interesting new areas. Naturally there will be issues of security, standardization and privacy all to contend with, but these are topics which go beyond insurance and rather affect the ‘new’ modern world as we (currently) know it. If insurance in the future will be increasingly dependent on data and devices, where will the burden of maintaining and future-proofing those devices rest? Will insurance start to consider the introduction of new conditions and warrantees which are directly influenced by the new Big Data environment?

      1.2.5 Scale Benefit – or Size Disadvantage?

      Insurers are increasingly recognizing the value in their data but are often faced with the challenge of working out how to get started, how to find and gain access to the data they need, then to convert this into a useable form. Even before they start any analysis, they have major issues in setting up the organization, systems and software to be used. Part of the complexity is in respect of the skill sets needed to undertake this journey, ranging from systems management, data management, analytical capability and the ability to translate the data and eventual insight into a solution which is ‘consumable’ by the end user.

      The increased change in mood towards more ‘agile’ organizations which undertake change through a series of ‘sprints’ rather than a consequential ‘waterfall approach’ may result in larger insurers having the same dynamic approach to change as that of the smaller company. On the other hand, perhaps smaller companies will want to adopt a more ‘risk-averse’ approach until such time as technologies are proven. Smaller insurers with more to lose might perhaps approach change with a ‘second mover advantage’ view of the world, adopting safe and incremental change which provides them with greater certainty

      The effective implementation and adoption of data and analytics by insurers and intermediaries will almost certainly and eventually lead to transformation of the entire industry. The first question is not ‘if,’ but ‘how quickly.’ The second question is ‘how’. Where will the change start?

      The immediate thought is that change will occur initially within the larger organizations which have the funds and ambition to change. But larger firms are complex by their nature, have legacy issues to contend with, and may not have the nimbleness to change quickly albeit they may have the desire to do so.

      On the other hand, smaller more agile firms with shorter chains of command may feel that the case for change is less clear, may be reluctant to incur expenditure, and simply may not know where to start their journey. These relatively smaller insurers, including specialist insurers, may also struggle to see the value of change. However, there are signs that even smaller insurers which embrace an analytical approach can grow rapidly. Specialty insurers can obtain greater insight into their existing book of business and become both more profitable and less vulnerable to volatile market conditions.

      European insurance carriers will have already started their analytical journey, forced to take the first steps by regulators who have demanded that insurers improve the management of solvency. Effective management of the Solvency II program or local equivalent has resulted in insurers needing to address a large proportion of the structured data within their control, especially financial data. The timetable for Solvency II implementation may have slipped but larger ‘Tier 1’ insurers have got an early start in managing their wider data program. As a result, they may also have the time, skills and perhaps also the confidence to start looking at other data areas with greater purpose.

      Another interesting conundrum emerges in that the effective management and analysis of data may start to have an equalizing effect, reducing the perceived differences between Tier 1 and other insurers. Larger insurers may become more ‘agile’ and mimic the smaller company. Smaller insurers may become cautious and keen only to adopt proven technologies which with time may have become less expensive in any event. Analytics in the virtual enterprise may also allow both larger and smaller insurers to become more confident in their outsourcing arrangements.

      At its most basic, an insurance company simply comprises three elements:

      1. Manufacturing of the insurance product – that is to say, underwriting, capital allocation and regulatory reporting

      2. Distribution – the way that a product is brought to market, which may be directly or through a third party

      3. Servicing – for example claims management and collection of premiums.

      Two of these three elements need not sit within the insurer, but rather can be discharged through third parties and partnerships, leaving only the ‘manufacturing’ of the product to be undertaken. As insurers increasingly identify the value of integrating their own data with that of their supply chain, outsourced and third-party activities will have the opportunity to become more fully integrated. We will have entered the era of the virtual insurance enterprise.

      Because of this new ‘virtual enterprise,’ fully supported by adequate data security and privacy, it is entirely feasible that Tier 2 and other insurers will be able to compete with and perhaps even outperform their larger competitors, not only as a result of more effective use of data and analytics but by virtue of their greater flexibility and nimbleness.

      Intermediaries will also have a part to play in this story. They will also need to develop data and analytical capabilities just to stay in the game. Supply chain experts will demand these capabilities from their supply chain simply to allow them to stay in the procurement process. Through this change which is likely to be driven by the procurement process itself, the insurance industry is increasingly likely to see the emergence of the ‘super supplier.’

      It follows that as СКАЧАТЬ