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Mar 13 2018 |
Discover Digital Insights through data
By: Sandeep Agarwal

Discover Digital Insights through data

According to Forrester Research “Digital Insights are the new currency of business”. Most of the business are looking for this new currency called digital insights, which is nothing but turning unstructured and static data into cognitive insights. Despite having multiple source and forms of customer data than ever before, most of the business including insurers remain stuck in the past. To thrive in today’s big data-driven marketplace, legacy insurers must make most of the use of the data and turn from FOMI Underwriters (Fear of Missing Information) to SOMI Underwriters (Strength of Meaningful Insights) digitally.

For any Insurance Company ability to evaluate and rightly price risk, determines the success or failure for business. Compare to personal lines, commercial lines insurance are more complicated and these complexities increase manifolds for the risks like general liability, specialty, E&O/D&O etc. These risks are highly complex, multifaceted and involves high values and high business impact. Due to these complex risks, there is a high possibility of subjectivity in making underwriting judgment while interpreting the risks related information and drive the actionable insights.

For insurance underwriters, these risk related information comes in all data forms (structured, semi structured and unstructured data) and the more unstructured data creates more ambiguity & complications. Resulting underwriter’s involvement in low value tasks (searching & accretion of information from various sources) and difficulties in accessing right insight from scattered data from different sources and different formatting of unstructured data. Underwriters further struggle in getting right data with key insights which usually time consuming with lot of manual intervention resulting imprecise underwriting decision.

Jim Barksdale, former Netscape CEO once said - “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.” Any commercial and specialty line insurance underwriter, like all human, relate and process information in a different way. Today Underwriters are looking for the capability for evaluating risk and not just classifying further enabling them to more quickly react to issues BEFORE they become clear and obvious problems. This is because ALL of the information about a particular risk issue is being included in the unstructured data analysis – rather than just classification done by an underwriter.

Carly Fiorina, former executive, president, and chair of Hewlett-Packard Co once mentioned that “The goal is to turn data into information, and information into insight.” Out of many choices unstructured data analytics (UDA) could be a powerful tool to get actionable insight digitally. As complexity of unstructured data lies within the human language which is quite different from the language used by machines. Therefore, the goal of an unstructured data analytics tool should not be to just build a bridge between these different languages but also provide cognitive insights by utilizing AI and machine learning techniques.

UDA can turn raw data into information that can be consumed by the underwriter, and through cognitive analysis you turn information into insights and further turn insight into action. UDA for Insurance can be achieved by following four components: 1). Data Accretion (Data Collection), 2). Data Transformation (Data preparation) 3). Data & Risk Profiling (Key Risk Data Indicators) 4). AI Machine Learning (Correlation Algorithms Development). These mechanisms can enable Insurer to convert unstructured data into actionable, decision-driving information in the mode of Cognitive Insights dashboard.

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These clear actionable digital insights from unstructured data is the key differentiation when selecting a good risk vs bad risk. These digital insights will not only enable underwriters to differentiate good risk from bad but also help them to decisively understand the wealth of information about risks that are residing in unstructured data with various sources. With UDA more risks with better pricing can be written quickly and efficiently. It will further able to provide underwriters a proficient and competent way to underwrite the risk and transform them from FOMI Underwriters to SOMI Underwriters.

Footnotes:

https://www.forrester.com/report/Digital+Insights+Are+The+New+Currency+Of+Business/-/E-RES119109

https://casestudies.storetrials.com/we-have-data-lets-look-at-data-e8a06e2e3331

http://www.hp.com/hpinfo/execteam/speeches/fiorina/04openworld.html

http://insuranceblog.accenture.com/insurance-leaders-and-cognitive-computing

https://www.ibm.com/blogs/insights-on-business/insurance/34402-2/