Of all the burgeoning ‘InsurTech’ domains, it’s in Big Data that the most immediate opportunities lie…

For insurance players, Big Data isn’t merely about having a more detailed profile of the customer and sharpening risk their management models writes Jonathan Lewarne.

It gives insurers the opportunity to re-imagine the very nature of insurance, add greater value to customers, and become ‘trusted partners’ - offering guidance on minimising risks, saving costs and leading healthier, safer lives.

South African insurers are, in fact, perfectly positioned to take advantage of Big Data and the rich supply of potential data streams that can reveal powerful insights into customers’ behaviour and preferences.

For most local insurers, the goals for the coming years will be to digitally transform operational processes (to handle the influx of new data sources), and to start using these insights to create truly great customer experiences.

So, let’s look at four specific areas where the intelligent use of Big Data can spur transformation in the insurance model:

1. Acquisition and onboarding

Approximately 5% of all insurance in South Africa is originated via digital channels (with the rest being fulfilled by the traditional channels of call centres and broker networks). However, digital and social media are offering interesting opportunities for insurers to promote targeted offers to potential customers, simplify the onboarding process and provide new channels of customer support.

By matching customer profiles to certain 3rd party data sources – such as the Deeds Office, eNatis vehicle registrations, or credit bureaus – much of the client’s onboarding data can be pre-populated. This means that customers aren’t asked to self-declare so much of their information, leading to increased accuracy and more attractive quotes being generated for the customer.

2. Micro- and On-Demand- Insurance

As digital channels slash the price of distribution, new models of insurance in niche areas suddenly become viable. Consider the example of Scottish start-up Cuvva, which rose to fame in 2016 with its innovative app-based insurance offering – enabling people to borrow friends’ cars and receive instant cover for a weekend, a day, or even just one journey. In South Africa, there is massive opportunity for this kind of ‘on-demand’ insurance.

In a similar way, there are many South Africans that may want to insure just one item, such as a TV or a cellphone, but don’t need a comprehensive insurance policy. Big Data insights can find those micro-insurance opportunities, and digital channels can serve them.

3. Claims management

The litmus test for a great insurer is the way they handle claims. It’s at this point when customers, who are often in some form of distress, most need their insurer. With a streamlined, fully-digital approach, insurers can speed up the claim process and provide much-needed peace of mind to their customers.

Additionally, smartly employing connected sensors (in cars, connected homes, or wearables);, means Big Data can alert the insurer in the event of a car accident, house break-in, or medical emergency. And by automatically relaying data to emergency response services, and proactively dealing with such crises, the insurer elevates their role in their customers’ lives.

4. Health and Automobile Insurance

These areas of insurance are particularly ripe for Big Data transformation – as real-time flows of data from connected sensors, wearables, digestibles and other end-points fundamentally change the nature of insurance.

Using the principles of gamification, insurers can create tangible, powerful incentives that encourage customers to make safer, healthier decisions. The key for insurers is to deliver these services with deft subtlety, and demonstrate that data is being used for personalised guidance (rather than as a ‘Big Brother’ watching one’s every move with a disapproving glare).

Taking advantages of these Big Data opportunities requires Insurers to think differently about the very model of insurance. It’s certainly not a simple task… as they keep a keen focus on their customers’ evolving needs, insurers must also select the right technology to carefully navigate their way around data privacy and cyber-security concerns, and ensure compliance with the likes of the Protection of Personal Information Act.

In South Africa, the race is on to see who will be the first to get it right.