Insurers today leverage third-party and external data across marketing, underwriting, and claims. While self-reported mature capabilities are rare in all three areas, this is likely to change in the coming years—insurers industrywide report that basic third-party data capabilities are common and that pilot activity is high.
Third-party data in the insurance industry has become more valuable as core systems providers incorporate AI, machine learning, and analytics capabilities, all of which require large datasets to train and to generate optimal insight. These capabilities improve efficiency and customer experience; in turn, these results augment the desire for more data and more sophisticated data capabilities.
A variety of factors are driving growth in insurer use of external data. Cost reduction is a critical component—whether to improve loss mitigation, identify fraud, or settle claims faster. Insurer interest in third-party data has also grown as carriers seek to meet customer expectations of ease and expedience of digital interactions that other industries (e.g., eCommerce) have set.
Carriers are using predictive scoring and analytics in underwriting, data pre-fill for distribution, external data in product development, as well as predictive scoring for fraud, severity, and subrogation, among others.
MassMutual’s digital agency Haven Life, for one, uses data from Acxiom and other sources to identify new customers with similar characteristics to their existing base. Allstate is working with Carpe Data to help identify claims fraud as well as verify claims.
As they leverage more and more third-party data, insurers will need to contend with the spate of new data regulations and privacy concerns. State, federal, and international regulations (e.g., GDPR) address and feed legislative and civil demand for transparency in how organizations use data as well as for individual access to and control over personal information.
For more on insurer third-party data initiatives, external data insurance use cases, and profiles of established and emerging third-party data providers, see Novarica’s latest report, External Data in Insurance: Overview and Prominent Providers.
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