ABI outlines data revolution opportunities
Insurers need to continue to tackle reputational challenges and gain greater public trust if they are to maximise the potential of the data revolution to benefit customers, Huw Evans, ABI director general, will say today, 4 March.
Speaking at Experian’s Insurance Summit, Huw Evans will set out the scale of the challenge and opportunities which the inexorable digitisation of society presents to insurers:
‘As more data gets used, we will need to be prepared to engage fully in the debate about the permissions required to make the most of it. If insurers continue to lag somewhere behind estate agents and politicians in the public’s estimation, we will simply lack the credibility to win the arguments we need to prevail.
‘That is why the ABI’s members have been at the forefront of tackling issues such as unaffordable flood cover, age-sensitive insurance and renewal pricing and why it will be essential, not an optional extra, for momentum to be maintained on issues like these which touch so directly customers’ views of our sector.
‘The future is in our hands as an industry. We need to have the courage and honesty to fix our own reputational challenges, the stomach for standing up for uses of data that benefit customers, and the cohesion to do this together as one industry, not revelling in the discomfort which individual firms may be tempted to feel at another’s reputational media storm.’
In his speech, Huw will outline four key opportunities for insurers from the data revolution, including better risk management, quicker claims processes and assessment, tackling fraud more effectively and new product innovation to meet the needs of a changing world.
Huw will say, ‘We have to do what this market and this city does best – innovate. Just over 100 years ago, vehicle insurance meant insuring a horse and aeroplanes seemed as fantastical as some of the devices we are now told to expect in ‘the internet of things’. The UK industry, and in particular our market here in London, has risen to every feat of modern engineering with products to match and I know it can do the same to meet the challenges of our ever-changing, ever-fascinating world.
‘The pace of technological change is both frightening and exhilarating. In the past two years more data has been generated and stored than in the rest of human history combined. Nearly 75% of UK adults access the internet every day, and by 2025 we can expect to have computing capacities 64 times those available today, at any time and in any place.
‘Adapting to the unremitting pace of technological change, managing an explosion in personal data and meeting the increasing expectations of a new generation of ‘digital natives’, who have grown up with the internet and smartphones, will define a successful insurer of the future.’
Huw Evans will outline the key challenges for the industry:
Changing consumer expectations
In the digital age consumers will expect the ease and flexibility they see in other aspects of their lives. This means a more interactive and proactive approach delivered through multiple channels, more personalised products tailored to individual circumstances, and greater transparency and evidence on how increasing amounts of data are used to help assess their risk.
Technical challenges
A major challenge will be developing the analytical capabilities to keep up with much larger volumes of varied data, particularly given the complexity of many insurers’ IT systems. The reward is great however, as this data will allow insurers to price risk more accurately, to offer more personalised insurance products and make the claims process simpler and speedier.
Commercial challenges
There will be an influx of new commercial challenges and opportunities – new ways of doing business to develop, and new markets to serve. For example, the cyber insurance market in the UK is expected to grow significantly in the coming years.
Public policy challenges
These include how politicians and regulators will view the changing operating environment for insurers, such as the use of increasing amounts of data and more granular pricing as a result. A key challenge for society as a whole is maintaining appropriate standards of data protection, and clarifying data ownership, in an increasingly complex data environment.
