Big data has helped the financial services sector, including the insurance sector, evolve magnificently. Traditional insurers are using data analytics to improve customer experience. But are insurers utilizing big data to its fullest capacity or is there an opportunity waiting to be explored?

The whole process of insurance underwriting is changing with a fast pace, being fed by our digital footprint. Whether it is ordering groceries online through mobile apps or using mobile wallets to pay for it, or even booking a taxi, we are leaving behind a footprint of information every moment. And it is this data that is being mined and analyzed by various organizations and institutions to eliminate risk, improve their efficiency, make their services more cutting-edge, and offer better products to us. While insurance companies once relied on historical data for actuarial calculations and risk management, they now draw upon data sources that are updated by the second. This enables them to be more responsive in an increasingly volatile risk environment. Thus, real-time data has become central to any kind of risk underwriting, and one who has access to this data enjoys plenty of advantages over his peers and is in a better position to underwrite risk.

In a recent interview, Bajaj Allianz Life Insurance CIDO Mr. Goutam Datta told TNM that AI /data-science will be used in a more advanced way to provide greater personalised offerings. Like most sectors, the insurance industry has also not been left unaffected due to the COVID-19 crisis. The first quarter of 2020-21 is likely to see subdued growth for the insurance industry. In January, Moody’s had said that the decelerating Indian economy is likely to weigh heavily on insurance premium growth for the next two-three years. However, technologies like Artificial Intelligence, Big Data and Analytics are expected to play a big role in transforming the industry going forward.

Mr. Goutam has highlighted the role of new-age digital technologies like Big Data and Analytics in developing key insights from the huge amount of data available with insurers about customers and their behaviour and how this can help insurers create need-based insurance products and services that will add value to customers’ life for achieving their life goals.

While speaking about Bajaj Allianz’s products advancement, Mr. Goutam spoke about their latest service offering on WhatsApp. “While other players are present on the platform, we have become the first life insurer to offer the most comprehensive set of services for our customers on WhatsApp, so that they can get resolutions on their policy 24*7, on their fingertips, instead of visiting our branch. Another digital disruption by us is i-SERV, a new-age, video-based customer service initiative that enables customers to get swift resolutions to their queries digitally. The video-calling service is available to customers at our branches, and digital touch points such as Life Assist customer portal and mobile app, enabling customers to avail hassle-free services from the comfort of their home or office.”

It is interesting to note how agencies such as CIBIL maintain our financial scores, which determine our financial track record and our creditworthiness. Experts are thinking of a possibility of having similar scores made available to the insurance companies. For example, in the life insurance sector, insurers try to assess the risk factor by looking at a customer’s medical profile, asking the customers about their lifestyle habits, and often through a health check-up.

This technology can eventually produce a revolutionary, “Health Score” card which will be on the lines of the CIBIL score. The better the score on your card, the better the rate you get for your insurance policy.

It is abundantly clear that the use of big data in insurance is already transforming the industry. For example, Ford has partnered with a company to develop a driver score app, which uses privacy-enhanced technology to tell insurance companies how drivers are performing to potentially lower their premiums. In the not-too-distant future, it will be possible to get an insurance policy by just swiping your thumb because your Aadhar account will have all information about you and is also connected with your bank account and it will be linked to your health insurance and life insurance scores.

The penetration of Insurance in the Indian Subcontinent is way below that in the other countries, however, we cannot ignore the fact of the sheer size of the market. For example, LIC alone today has more policies than the entire population of Australia, which just goes to show two things the penetration is still low, but in absolute terms, it is more than most countries. So, we have the volumes, we have the technology and we have now the will of the insurance companies to tap this vast potential.