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2015 Trends: A Year of Living Data-ly

It’s time for us to take our annual stab at trends and directions that are going to influence insurance technology for the next 12 months.  Last year, we saw interconnectedness as an overaching theme.  This year, we see that theme contributing to a larger construct:  The need to effectively cultivate, utilize and protect our most significant asset — Data.

Data and Analytics will penetrate all functions …. 

When it published its top 10 casualty Insurance Trends for 2015, Marsh USA noted that there would be capital providers and underwriters favouring certain classes while “leaving less competition for the harder-to-place risks.”

Pretty standard stuff.   The wrinkle is how these decisions are being made:

“Insurers continue to focus on underwriting profitability — and are using analytics to find it in a very competitive marketplace. Carriers are getting more and more granular in their underwriting in order to differentiate between risks and to be able to feed their models:   A ‘go or no-go’ decision for carriers now often comes down to a ZIP code or a street address.”

Consumer insights rule

Based on a survey of insurance executives in 65 companies around the world, EY found similar characteristics to those of Marsh, including the need to adjust to lower returns on assets and the higher demands of consumers.  EY found that the executives were shifting the sales process to accommodate the changing consumer needs.

This included the integration of research, product development, and sales strategy activities.  This is driving the exponential growth of data and analytics and the rise of social media.

It also is driving the need for operational agility and tight alignment with marketing and sales.  One objective is to innovate processes to allow personalized products  based on insights from analysis of consumer data.  According to EY, “analytics should be viewed as a creative, customer-facing enterprise — rather than an unwieldy IT initiative”

IT roles being disrupted by data/analytics

The accelerated need to derive insights from data and causing changes in the traditional IT department.  In its annual Strategic Technology Trends report, Gartner notes that Big data (think Telematics and Internet of Things) is forcing innovation of systems to allow analytics to be embedded within the computing environment.  In addition to reporting analytics, these smart systems will be capable of  providing alerts (sometimes to other systems) based on context.

The development of ‘smart machines’ with analytics and communications capabilities dovetails with maturation of cloud computing and software designed technology platforms and security systems will drive new IT organizational structures.  The Gartner report says this era “will be the most disruptive in the history of IT.”

 Data governance becomes critical

The rise of data and analytics is underscoring a glaring deficiency in the business hierachy, according to Bassam Zarkout, CTO at the information governance solution provider RSD.

For many years, organizations assumed that the IT department had the control over data management.   Unfortunately, the majority of IT managers were fully occupied with development and operations responsibility and data governance was treated  as a poor cousin.

Quoted in Insurance & Technology, Zarkout says “More organizations in the market are going to become aware that there has to be someone responsible for information and the governance of that information.”  Zarkout suggests that we will see larger organizations will be appointing Chief Data Officers to assume this responsibility.

CyberRisk could find a home here …

For insurers, there may be an interesting variation for organizational data accountability.

As we’ve noted previously in this space, cyberrisk is a two edged sword for insurers and brokers that will remain high priority in 2015.  On the one hand, this is a relatively new risk category that holds promise for net new risk and insurance products.

On the other hand, insurers and brokers are facing the same risks as their clients and need the same analysis, risk quantification/control/financing actions as as their insureds.  It might be that both edges of the cyberrisk sword can be sharpened by the same artisan:  the Chief Risk Officer.

 We’re looking forward to your thoughts ….

One thing we’ve learned over the years is that you all are a bunch smarter than we are.  We look forward to your thoughts in this space and in person.ICTC-wheel-plain-r60

One good in-person spot will be at the 2015 Insurance-Canada.ca Technology Conference in Toronto on March 9-10, 2015.

It’s a special year for us:  The conference will mark the 20th anniversary of Insurance-Canada.ca.  Be prepared for nostalgia… and cake!

 

 

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