Insurance companies are still failing to fully exploit the potential of the data in their possession. The share of those who use them to access new markets stops at 40%, a slightly higher share (43%) has modernized and enhanced their algorithms for risk management, and only 18% overall manage to optimize the use of data to gain a competitive advantage. This is what emerges from the Capgemini Research Institute report “The data-powered insurer: Unlocking the data premium at speed and scale”.
Yet, for years, a mantra has been repeated according to which insurance companies that have non-traditional and real-time data sources, such as those coming from telematic devices, wearables and social media, will be more competitive, because they will be able to satisfy the growing customer expectations in terms of convenience, personalized advice and dynamic rates.
Over 90% of companies that have achieved this type of data mastery, as defined by the Insurance Data Master report, reported higher rewards, a better combined ratio and higher Net Promoter Score results than half of peers .
These companies have three fundamental differences from the others: 92% have centralized governance or a facilitating body, 62% collaborate with Insurtechs, and 97% have created open APIs that allow third parties to access their data.
The report notes that insurance companies are using data to develop new solutions, create value-added services for customers, and gain unique insights to understand risks and price them. Thanks to the data, more than 40% of companies are entering new markets, moving from risk protection to risk prevention, as well as transforming actuarial assumptions. 43% are also using real-time data to update actuarial models, while about a third use data to simulate new risks.
Many companies are also investing in modern risk algorithms that can store a wide range of data sources and display them quickly when a decision needs to be made. In the last two years, around 43% of insurance companies have modernized and updated their risk algorithms and, consequently, almost 39% of them can state that their risk selection and pricing process is based on facts and data.
However, only 18% of insurance companies possess technical skills, culture and practices capable of supporting data-driven programs that allow them to make the most of the growing volume of data. These organizations, referred to as Data Masters, are considerably larger than their competitors, and most have an average turnover of more than $ 20 billion.
Compared to peers, Data Masters stand out in some key areas: in the insurance sector, almost all companies (97%) have developed APIs to allow external properties to access their proprietary data, compared to only 36% of peers. . Nearly 90% of them can also easily connect external data sources with internal platforms, creating a win-win exchange that results in faster and more accurate claims resolution for 39% of respondents.
