As the world has gone ever more digital, the opportunities to create new products, new services, and better customer experiences have moved forward aggressively. An unfortunate consequence of the increasingly digitized experience, however, has been growth in fraud which can approach carriers from a variety of directions. Insurers are not alone in facing this, of course; higher transaction businesses, including banks, are further down the road of experience and adoption. Looking towards these businesses can provide carriers with interesting models and “lessons learned” for adoption in their own unique circumstances.
Across all parts of financial services, companies are using ever-better technologies, including artificial intelligence capabilities, to explore public data sources and offer some intriguing opportunities to better manage blocks of business. As a complement to more traditional reviews of data (e.g., patterns of transactions, IP address analytics), the use of public data analysis can allow carriers to see things in new and different ways. Some carriers, as noted in this recent Digital Insurance article, have begun partnership programs with entities (e.g., InsureTech start-up Carpe Data) to do deeper dives than have previously been possible.
Of course, these explorations expose new issues, including regulatory scrutiny and potential privacy concerns, as carriers move further into a previously untapped area. These considerations are very real since management of claims (and fraud) are a critical contributor to the overall profitability of a block of business. Also, since carriers operate in a highly competitive ecosystem, this can be viewed as another manifestation of what we’ve previously described as an “analytics arms race.” Carriers need to be aware of both their own absolute position and their relative positioning against competitors, lest they create an economic disadvantage for themselves.
Another aspect of this analytics focus is the focus on the potential working relationship with InsureTech entities. Allstate’s efforts are explored in this recent article. In many ways, R&D for technology companies and financial services firms can now be spelled M&A. Watching developments in the startup world can provide both acquisition targets and inspiration to more mature, mainstream entities. The lure of Silicon Valley can be strong indeed; next week, I’m fortunate to be leading a group of 20 carrier CIOs and CTOs on an innovation tour of The Valley. The tour is designed to specifically explore ideas such as these. Lessons learned from prior events have been highly instructive for participating carriers.
The world is spinning faster than ever. Having the right tools and the correct insights are critical as companies look to concurrently navigate the complexities of a dynamic space and create competitive advantage.
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