We are still only insurers in 2013!
If one more person tells me that insurers have to get into Big Data in 2013 if they are going to survive over the next five years, the response will not be pretty!
Let’s make it very clear: you do not need Big Data, data warehouses, new data feeds or any other form of data vendors want to sell you. Why? Because the ability of insurers to analyse and leverage the value contained in their existing data is already at least five years behind the supply of data they already have.
The key to success is having analytics and next-best-action (NBA) capabilities to exploit what data they already have. So, any insurance company which genuinely wants to exploit the value wrapped up in its data today had better invest its money and resources quickly in leveraging what it already has and work much harder at constructing adaptive and predictive analytical models.
This is a brave new world in which insurers are still mainly just babes in arms. The telco and banking industries have already embraced the early waves of analytics, starting small, moving fast and growing their knowledge of what works and what does not. The returns on investment have been staggering, delivering campaigns in days not weeks, increases in inbound offer acceptance rates in hundreds of percentage and increases in average revenue per customer approaching double figures percentage. At the UK’s largest telco, NBA is part of a multi-stage initiative where the organisation generated an incremental £24M of annual operating margin just in the initial phases.
After quite a period of time doing this and learning what works, these companies are now moving on to more refined marketing, using sophisticated arbitration metrics to balance insight into customer interests, risks, loyalty, etc., with corporate priorities, such as revenue, costs, and branding.
Insurers, on the other hand, are still making the mistake of discussing how they should be constructing Big Data sources. It is so obviously putting the cart before the horse and they will just end up having to go back to square one and learn their trade. So, what is to be done?
Insurers need to move rapidly into understanding what they can do with their existing small or medium data, develop NBA marketing and customer models that successfully develops business in their particular markets. When that is done they can start thinking about new (Big) data sources and what they can do with it.
This is 2013. Start with understanding how you can use Dynamic Analytics and NBA to leverage what data you already have to grow revenue, satisfy customers and increase retention. Generate big returns out of that and then start worrying about getting new sources of data when you have learned what works and what doesn’t in your specific market.