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Too much data: The risks for insurers

Georgina Bloomfield is the marketing operations manager at Endava. She has over a decade of marketing and content creation experience, much of which has been focused in the technology and insurance software sectors.

The use of data in the insurance world is a significantly large topic of discussion. The opportunities are ripe for innovation, changing the entire global insurance landscape. The technology is there, and the mindset in the insurance space is showing signs of catching up. Opportunities for insurers to utilise data in previously unimaginable ways is now something that’s spoken about in a serious manner on a regular basis. 

Insurers have the opening to harness data and technology to enrich the customer experience, create new products, and go to market at a competitive pace, and this no longer applies to just start-ups.

However, amongst the excitement, there is a risk. Insurance is the primary industry for all things risk – and in this case, the risk of having access to too much data can become a liability to innovation without proper protocols and architecture in place. Insurers are well aware of this (and perhaps it is this risk that’s been a blocker in the pace of the industry’s mindset over the years).

In collaboration with EIS, our latest whitepaper discusses the implications (both positive and negative) of smart data in the insurance space. Cybercriminals have become accustomed to infiltrating every and any device or item that comes with an internet connection. With cars being the latest among a flurry of intelligent possessions to control, insurers must consider the implications of how cybercriminals could take advantage of their new products and services. Cybercriminals are employing new damaging tactics. Victims are not only locked out of their servers until the ransom is paid but now face the release of sensitive data on leak sites. This exposes customers to subsequent cyberattacks and scams. 

Guidance, issued by the NCSC to organisations and people, aims to help online security. As insurers increase their digital presence, cyber security becomes more important than ever, especially for healthcare, which was specifically targeted during the pandemic.

However, AI and smart data are becoming increasingly necessary in everyday life. Insurers cannot be cowed by the risks involved with innovation. Instead, they can look into the security offered by the technology bringing about the progress in the first place. The buck, however, still in today’s modern world, must still stop with a human being.

Understanding the technology that allows insurers to gather such data (for example, from a driverless vehicle, or even home appliances) is one thing. Mastering it internally is another. Of course, there can be essential training for the users of the software – but there must be more done than that. It comes down to a much more slow-moving beast. And that’s internal culture. A culture of caution – and not of the technology or having it – but an understanding of the risks it poses when not used correctly, or if best practices aren’t adhered to. 

Data is a double-edged sword, and when not propped up with up-to-date governance and expertise – can be an expensive mistake, for many reasons. From data leaks to privacy infringements, data can be a dangerous tool to wield. And in the insurance space, where the data collected is so vast, there must be the tools to dissect and analyse the data for the right purposes. 

When played correctly, the data game can be a fruitful one. It can enhance the customer experience by improving products and ease of use for the end user, thus encouraging customer loyalty and further revenue. In order to succeed at this game, the most relevant data should be accrued with the fewest touchpoints possible for the end user.

As Rory Yates, head of strategy at EIS, can attest, it’s a game of balance:

There’s a big difference between just driving a high frequency of experiences and the value of those experiences, and that balance is key, as is your permission to act on certain data points. As insurers create new products and services, we are seeing a shift in how those products manifest in people’s lives. Embedded insurance can be about acting like a PayPal and disappearing as much as possible, seamless and integrated. However, for other offerings the visibility is increasing, pay-per-use, behaviour-based and risk mitigation are all good reasons to increase the touchpoints with the customer. The key then is to be hyper-personalised, relevant and intelligent, guiding people and interacting fluidly requires smart data and experiences to converge beautifully.”

You can read more about the significant benefits and considerations of unleashing data in new ways in our whitepaper here.

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