Opportunities for Innovation in the Insurance Industry
Although our industry has been making strides to incorporate these new capabilities, a perception still exists that insurance tends to lag behind some other industries, such as retail and finance, regarding the integration of emerging technologies. For instance, the insurance business is doing far less than the retail sector when it comes to using technology for marketing and customer acquisition purposes.
In recent years, the retail industry has been much more willing to buy data and use technology to gather detailed information about individual customers for purposes of highly targeted marketing and increased sales. One example is the emerging use of video surveillance and facial recognition tools to monitor behaviors of in-store customers. While such technology can be used for security purposes, it can also be used to monitor individuals shopping behaviors, allowing retailers to create personalized customer profiles and specifically tailor their marketing and sales approach in a way more likely to increase sales.
Part of the reason for our industrys slower adoption of some emerging technologies is the nature of the industry and the unique regulatory requirements we face, and part may also be the natural inclination of risk management professionals to avoid or limit risk. While such characteristics may limit the speed with which we employ technology and analytics relative to other industries, our approach also has virtues. For instance, we tend to be a bit more deliberative and careful in the way we handle privacy and the impact that new technologies might have on customers. When it comes to the use of technologies such as facial recognition software, customer privacy is a legitimate concern.
However, the insurance industry could definitely improve in our approach to technology. Here are a couple of ways:
Digitization and Centralized Storage of Data
Not all insurance organizations realize or put enough emphasis on the fact that all of the data they have available to them, taken from a variety of sources, represents a tremendous strategic asset. They may store all of their various data in disparate places, complicated by inflexible legacy data systems. This can make comprehensive analysis very difficult. Insurance companies should work to digitize as much of their data as possible and store it in a centralized data warehouse or networked data marts. These types of systems help facilitate advanced analytics, including the discovery of trends and data interactions that might not otherwise have been noticed.
Innovation Through Cooperation
To fully realize the potential of big data, emerging technologies and advanced analytics, insurers need to innovate and develop new practices that may, at first, be resisted by many staff members. Furthermore, sharing of data among insurers through intermediaries is an important part of facilitating this innovation. This can be difficult, as the industry has traditionally been a bit fragmented in this regard. Here is where organizations like The Institutes and The Institutes CPCU Society come into play, providing industry-wide education on data management, emerging technologies and advanced analytics and helping to bring together professionals across the insurance business to ensure the successful future of our industry and its ability to serve society.
Ours is a great industry that provides a tremendous service. Insurance is a vehicle for helping people when they are in need. Big changes in data and technology bring great opportunities for improvements in the way society receives this service. It is our responsibility as an industry to continue learning as much as we can and to do our best to innovate in a way that provides for our customers and the general public in the most effective way possible.