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A recent report published by Accenture on technology’s effect on insurers and policyholders has found that most insurance companies fail to validate their data.
The report, “Technology Vision for Insurance 2018,” surveyed over 600 insurance executives across the world. Accenture’s paper also obtained insights and opinions from technology luminaries and industry experts.
One of the report’s key findings is that only 26% of insurers validate their data to some extent; another 19% attempt to validate their data but are unsure of the quality. The findings come as a surprise, as 82% of the survey’s respondents said that their organizations must innovate to maintain their competitiveness – and that innovation involves having access to new data sources.
Among the 48 Canadian respondents of the survey, 98% said that their organizations base their most critical systems and strategies on data. Eighty-three per cent (83%) also said that they “agree” or “strongly agree” that their organization is increasingly using data to drive critical and automated decision-making. However, only 8.3% of Canadian respondents confirmed that they validate their data sources extensively and have full confidence in the quality of that data.
While automation could – on paper – improve the veracity of insurance data, some executives have their concerns. The report found that 80% of respondents agreed that automated systems create new risks, such as fake data, data manipulation, and inherent bias.
Data manipulation by outside parties was another main concern among insurers, the report discovered. Thirty-four per cent (34%) of the respondents answered that they have been the target of things such as bot fraud, spoofed sensor data or falsified location data. Another 32% believe they had most likely experienced such an attack, but could not verify it.
“With their industry on the edge of disruption, insurers are feeling the pressure to reinvent their businesses, and the influx of customer data from new technologies presents ample opportunities to help do so,” commented Accenture global insurance lead Michael Costonis. “But insurers must carefully consider how they verify, protect and use this data. In addition to addressing the security and ethics of data use, they must have appropriate data-grading capabilities to ensure the accuracy of the data they're using to make crucial business decisions.”
Costonis added that data is the “lifeblood” of insurers, since it helps carriers make more accurate pricing, risk, and operational decisions. However, there are risks if that data is not properly validated, he warned. He then recommended that insurers should take steps to improve data veracity, such as building a data intelligent practice.
