Big Data insights enable auto insurers to monitor and analyse consumer driving patterns

Insurance firms are feeling pressure from all angles according to recent data released by PwC, which states that 65 per cent of insurance CEOs have expressed worry that new entrants in the insurance industry are a threat to growth, while 94 per cent are concerned about over-regulation in the sector.

Insurance costs are rising as well, with the average cost to insure a 17-22 year-old driver already exceeding £1,200 per year. The main reason car insurance for young drivers is so expensive is that prices are set based on the amount of risk to the insurer, and statistics show that young drivers are far more likely to be involved in accidents than drivers over the age of 25.

The recent emergence of Big Data has created a renewed interest in data management across the insurance industry, and has brought with it opportunities for both auto insurers and the drivers who purchase their policies. The increasing amount of digital information generated and made available for analysis has the potential to provide deep insights into consumer behaviour, and to improve outcomes for both insurers and policyholders alike.

According to Nitin Rakesh, CEO and President of leading digital modernisation and IT services company Syntel, established insurance companies have vast stores of historical information that give them a distinct advantage over newer competitors.

“The foundation of the insurance industry is accurate risk assessment, and traditional insurers have a wealth of data at their disposal,” said Rakesh. “Their business is heavily data-dependant, and insurers must leverage data more effectively in order to remain competitive and retain customers in the digital age.”

The modern IT landscape requires insurers to adapt and cater to new customers that typically demand greater ease of access and information, as well as innovative new business models that are creating competitive niches throughout the industry.

One such innovation is “pay-as-you-drive” insurance, which uses vehicle-mounted telematics devices that allow insurers to collect real-time data on actual driving habits. This data enables insurers to make a more accurate risk assessment and offer more competitive insurance premium prices, leading to better customer retention.

However, the model is data intensive and requires insurers to effectively leverage Big Data analytics to sift through mountains of real-time data to derive the information and insights they need to make informed decisions.

“An innovative technology partner can help insurers stay ahead of the data overload and unlock hidden patterns and insights within their data to better serve their customers,” said Rakesh.

“Big Data provides insurers with an opportunity to create a competitive edge by collating, extracting and truly understanding customer data so that they can pass on both convenience and cost savings to their customers,” said Rakesh. “Insurers that choose a digital path will reap the rewards, while those that hesitate will find themselves at a serious disadvantage in the new digital marketplace.”