The key is first setting business goals and plans for monetizing data, says Wendy Shapss, Co-Leader of FTI Consulting’s Insurance Services.
n today’s digital era, data is power. But you have to know what data you want and how to leverage it to gain value from it.
As traditional insurance firms transform themselves to excel in the digital marketplace, they are looking to adopt the innovative and advanced technologies of the InsurTech sector. Some firms have formed strategic alliances with InsurTech companies to achieve this, some have acquired or invested in InsurTech startups, while others have launched their own in-house “skunk-works” initiatives to work toward transformation.
Whatever the route, it’s important to understand the symbiotic relationship between technology and data in the digital era. Monetizing data starts with defining the business goals for developing certain InsurTech capabilities in the first place. Consider these goals for example:
- Collecting more data from your existing client base: Do you want to strengthen existing relationships by knowing your clients better, or perhaps cross-sell or generate new leads?
- Developing Artificial Intelligence (AI): The wave of the future, AI can provide insights into human emotions. It can find patterns and anomalies, and when combined with Big Data can improve fraud detection and claims automation.
- Developing mobile apps: The disruptive advantage carved out by InsurTech startups empowers customers to cherry-pick “on-demand” coverage. It also allows for real-time interaction that especially appeals to consumers who engage through their smartphones.
- Collecting information gleaned from social networks: Life events such as births, new jobs, marriage and travel plans can provide opportunity for getting new products in front of individuals.
These examples are only the tip of the iceberg. As with every industry in the digital era, the rapid pace of change makes setting goals five or 10 years in the future a challenge. Nonetheless, traditional firms must look forward and determine their appetite for risk and cost efficiencies to help drive their current decision making both during and after transformation.
“Want more insights from our latest content? Click here to subscribe based on your specific area of interest.”
Agility and Attitude
Developing InsurTech technology capabilities alone will not transform a traditional insurance firm, nor will it resolve the issue of data monetization. There are other, differentiating factors to adopt from the InsurTech sector — factors that have made the sector a success and have led to $2.32 billion in total funding last year.
Two factors stand out: agility and attitude. InsurTech companies have an infrastructure in place that allows them to support and deliver on innovation. Further, within their ranks are people who know how to manipulate data and pivot quickly to best serve consumers. Typical among these companies are employees who understand the expectations of the next-generation client base.
Meanwhile, InsurTech startups live and breathe by the classic Silicon Valley dictum of “test and learn.” They experiment fearlessly by offering new products to subsets of consumers to collect data not just on the appeal of the product, but on price points, and sales. If it works, they keep it. If it fails, they move on.
Insurance companies transforming to the digital marketplace can take comfort in the fact that their scale can serve them well. Financial resources and reach are a competitive advantage and can be exploited as they make the most of the data/technology relationship. For many companies, assistance from knowledgeable and experienced third parties can play a major role in helping gain transformation and a competitive edge.
Wendy Shapss is a Senior Managing Director at FTI Consulting and is based in New York. She is Co-leader of the Global Insurance Services practice and helped launch FTI Consulting's “Advanced Analytics Center of Excellence,” which facilitates digital transformation objectives for clients. Ms. Shapss has more than 20 years of experience in accounting, auditing, fraud and financial-based matters and specializes in litigation consulting, forensic accounting, fraud and financial investigations.