Analysis: The Knowledge – Big Data is changing everything, say brokers
A data rich world will bring huge opportunities for brokers, according to our survey respondents. But 40% said the insurance industry is worse than other sectors at exploiting all this information, while more than 90% believed they needed to work more closely with insurers to make the most of it
Ninety-six percent of brokers who responded to the survey believed there would almost certainly be winners and losers as the industry adapts to the opportunities and challenges that Big Data presents.
The same proportion believe a more data-rich and connected world offers opportunities to innovate and create new products, with more than one-third (36%) seeing most opportunity in cyber liability.
“How long before we see claims against companies that have incorrectly charged because of the use of defective data?” asked one, while another believed opportunities would be realised, but only if the industry, other financial institutions and credit rating houses were willing to work together.
Data sharing is essential for telematics to move into the next growth phase, said 69% of respondents. “Transferability of data between providers is key to creating competition and innovation,” said a Cheshire-based broker.
But others feared that too much sharing and standardisation between telematics packages could mean some firms losing their USP.
Others were worried about disruption from non-insurance providers, particularly if the industry is slow to get on board with Big Data. “Google, Microsoft and Amazon are looking to offer the same as insurers, but quite possibly in half the time and at half the cost,” said an Ilford-based broker.
Respondents were fairly unanimous (88%) in thinking that more data equals more rating factors and will result in differential pricing and products.
The challenge for insurers is sifting through masses of information to extract the real value, they thought, as well as determining whether data is reliable.
Most respondents believed that the Internet of Things has potential to be transformative, particularly in motor and home and contents insurance.
“It will revolutionise home insurance to provide the flexibility and tailoring that customers rightly expect,” said one. But another believed changes had so far been “over-hyped”.