ABI assistant director, head of strategy Matt Cullen discusses how the technological revolution is presenting insurers with big challenges but also big opportunities
Digitisation is arguably the global megatrend with more scope than any other to revolutionise how firms operate – an issue no insurance executive can ignore.
In recent years society has entered an unparalleled period of technological change. Twenty years ago virtually no home had direct access to the internet. Smartphones, comparison websites, and driverless cars are no longer the impossible concepts they seemed then.
Rapid change has been accompanied by the rise of ‘big data’ - an explosion in the volume, variety and complexity of information generated and stored. The amount of data in the world today is equivalent to each person in the UK tweeting three tweets every minute for 132,900 years . And over half of this data is less than two years old.
Over the coming years the technological revolution will continue. We cannot predict which impossible concepts will become possible, but we can be confident of two things: first, that the world will become a profoundly different place to the one we inhabit today and second, that ‘big data’ will be at its heart.
The digitisation of society touches everything the insurance industry does, and the race is on to exploit this. In the digital world, data will be a critical asset for insurers looking to offer their customers the right products, at the right prices and in more connected and interactive ways.
Data will help the industry prevent fraud, lobby for important policy outcomes and deliver new industry initiatives.
This creates a range of challenges for our sector, such as:
- The technical challenges of developing the analytical capabilities to deal with information which is much more varied and unstructured than simple quantitative data, and is available in huge volumes;
- The commercial challenges of incorporating ‘big data’ into pricing, claims, marketing etc; and
- The public policy challenges of using data in ways that are acceptable to consumers, policy makers and regulators.
These challenges can, and must, be met, but they will be disruptive. Insurers that genuinely embrace the digital world will not only embrace new technologies, but new ways of thinking across all aspects of the business.
Keith Holmes, head of digital analytics and data at RSA, Michael Spiteri, partner at PWC and Jonathan Hewitt, global chief marketing officer at Octo, will be debating “the data arms race” at the ABI Motor Conference on 2 December 2014.