The future of insurance is well and truly here: the only way insurance carriers will be able to survive and thrive is by utilizing big data, including new and emerging data sources.
In a recent interview with Mad Money’s Jim Cramer on CNBC, Chubb Ltd.’s Chairman and CEO Evan Greenberg commented: “We spend a billion dollars a year on technology. We’re in a world that’s going from analog to digital…if you remain analog, you’re history.”
Greenberg wasn’t just describing digitizing an industry that has historically adopted technology at glacial speeds, but how harnessing big data can help insurers actively predict and prevent loss, rather than only deal with the financial aftermath.
“Loss costs rise every year by 4 to 6 percent,” explained Greenberg. “There is always inflation on liability, property—repairs, labor, and so on.”
This is where technology, especially AI and machine learning, becomes an advantage, not just the latest industry buzzword. Traditionally, insurance carriers use legacy data sources across all lines of business and some, like Chubb, are using new and alternative data sources to alleviate systemic problems. These alternative data sources include social media and publicly available online data, and have been proven to mitigate loss cost, among many other benefits.
In the interview, Greenberg specifically mentions claims and underwriting as areas to better serve their clients. For example, the existing process for pricing, quoting, and underwriting small- and medium-sized businesses is predominantly manual, time-consuming, expensive, and not ideal for the carrier or consumer.
“Right now, if you’re a small business, to underwrite you we ask you about 30 questions. For Chubb, over the next 18 months, that’ll come down to about seven questions, because we can just scrape the answers from data that is publicly available. [We] don’t need to bother you with that,” he told Cramer.
Carpe Data, using this type of new and emerging data, completes the picture of new business and streamlines a carrier’s intake process by prefilling profile data and standard eligibility questions with validated data. But why would a carrier only evaluate the business once during the policy’s lifetime?
“Until now, carriers have looked at data at a single point in time, at the underwriting stage or the first notice of loss or injury,” says Max Drucker, CEO and Co-founder of Carpe Data. “But now we live in a world where data can be accessed continuously, it’s fluid—data is now a stream. So we can see when business is offering a new service, or an apartment building added a pool as it happens, rather than waiting for the next, undetermined point of time when a carrier may check a database.”
In the short space of time that these alternative data sources have been available to carriers, Carpe Data is already at the forefront of its evolution by giving carriers the ability to continuously monitor their policies with real-time data, across their entire book. Being able to underwrite with more than a static picture through Carpe Data results in prevented claims, opportunities to upsell, reduced premium leakage, and overall processing efficiency.