Speaking in June at the Financial Times Future of Insurance event, head of the Association of British Insurers Huw Evans said carriers must “become data-rich or find themselves drowning in it”.
Big data is a buzzword in the insurance industry that may still not mean much to brokers. While big insurers have access to a wealth of data at their fingertips, smaller
brokers do not have the same luxury.
Despite this, brokers are the closest to the ground and most in touch with the source of all data: the customers themselves.
Speaking to Insurance Business UK, broker and affinity director at Legal & General Kevin Roberts said insurers were beginning to wrap their heads around what big data means for the industry, and brokers were keen to know what it would mean for them.
“I work with brokers large and small, and the conversations I’m having with them are how do we utilise their data and knowledge of customers to correlate and then enhance risk pricing with them,” Roberts said. “And we do that very successfully with some of our partners, which gives them the competitive edge which I’m all about.”
Ultimately this is the end benefit for brokers: having more information than they could possibly acquire on their own, and insurers being able to use that data to offer competitive prices.
“The channel, and the knowledge of customers that brokers large and small have – I’m fascinated to work in partnership with these guys to utilise that data and provide better insurance, better portfolios and better prices for their customers,” Roberts said.
The only way this can be achieved is through brokers and insurers collaborating. Since brokers are there on the ground, actually speaking to the people being insured, they are the source of an indispensable amount of useful information.
“That’s what brokers are good at, certainly in more bespoke, commercial risks,” Roberts said.
He also cautioned against over- reliance on data and locking customers out. “We’re seeing with flooding, the advent of Flood Re, insurers, through their selection methods, deselect some parts of the country that are prone to floods,” Roberts said.
“We just have to be careful and work as an industry so that we use it sensibly and we don’t create a data underclass: people that can’t get access to normal levels of insurance and premiums just because their risk profile has been judged as less desirable.”