Can data science help insurance to gain a competitive edge

Insurance is one of the largest industries globally, in terms of investments, returns as well as its social role in covering risks.

As the insurance sector works on investment and returns and also is about risk management, needless to say it has tons of data available, and traditionally uses statistical models for risk assessment and deciding premiums and so on.

This background makes Insurance an ideal candidate for use of data science to gain a competitive edge.  Many of the insurance giants are using these data tools to improve all the areas of insurance business right from product development – i.e. creating attractive policies for the customers to the claim management.

Let’s look at a couple of interesting mechanisms used for creating attractive and tailored insurance policies.

• Insurance companies are taking personalization of the policies to the next level.
• Insurance companies like Blue Shield Blue cross have started an initiative where the customers are encouraged to wear the smart devices and share the fitness data. This near real time data is then used to personalize offers and tailor services. The customers are given incentives for meeting their fitness goals.
• Driving insurance companies are taking a similar approach for the vehicles and drivers to use a tracking device to monitor driving behavior to offer discounted premiums and incentives on driving insurance policies.

It also needs to be mentioned that monitoring and collecting such data gives rise to data security concerns and other ethical questions about collecting and sharing personal data