Data and insurance go hand in hand, and the tight-knit connection between them has only been further emphasised in recent years. At an MGAA webinar on the data challenge facing insurance providers, Kirstin Duffield, CEO of Morning Data, noted how it has become a defining word in modern times. Particularly during the COVID-19 pandemic, she said, it can feel to many that they are drowning in data as new pandemic-related statistics become available, consumed and interpreted every day.
Even without COVID, however, modern life is inundated with data, with wearable tech feeding constant information on your heart rate or your daily step count. Then on the media side, data and statistics is made available through reactions and reshares on social media, and through cookie-controlled advertising. It is clear that the constant flow of more and better data has challenged society, she said, and sometimes even our view of ourselves.
“Data really has become the new currency of the modern world,” Duffield said. “But something that struck me when I was considering data in the insurance industry specifically… was remembering a presenter in a conference back in 2015 who commented that, in three to five years, the data associated with a policy would be worth more than the premium that was charged for it.
“And then, run forward a few years and, I think it was in 2019, I was reading an article penned by one of my market colleagues. And the punch line really resonated with me as a response and that is, ‘Are we still actually in the insurance industry? Or are we not in a data industry, of which the subject matter is insurance?’"
When data is consumed, it takes on a pyramid of relevance and usefulness, she said, and when it is assembled in an accessible format this means that organisations can define descriptions, counts or measures with respect to any information contained within it. When this is analysed it becomes information, which becomes knowledge, which leads eventually to wisdom. It is these actionable insights that are the most valuable to the insurance industry.
“Now data today is quite an interesting challenge,” she said. “The industry, of course, uses data and obviously it lends itself well to our industry [when it comes] to assessing risk, identifying fraud, and focusing business decisions. And, of course, it allows MGAs to tell brokers, regulators, stakeholders and carriers, what it is that they’ve written, policies issued, the nature of the risks, the values attached to the policy, information about the insured, how much the premium was, the excesses or the deductibles and probably the inside leg measurements of the MD’s dog.”
Duffield noted that people feel overwhelmed by the amount of data available. Insurance intermediaries, therefore, need to start asking some clear questions, including:
The process of managing and utilising data should always include this internal question set, she said. Insurance providers can make the mistake of thinking that once data is collected then that data will be available and useful to them indefinitely, which is simply not the case. All data must be considered with a critical eye and a continuous assessment of what has been collected, how it has been collected and the value it can bring to the business.
