Insurers are wasting unstructured data - CSC, Xchanging

Insurers are wasting unstructured data - CSC, Xchanging

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Unstructured data could be a future breakthrough for re/insurers navigating big data, analytics and underwriting challenges, according to tech firms CSC and Xchanging. 

Data collected by re/insurers comes in two varieties, structured and unstructured, CSC and Xchanging noted.

The industry staple for determining premium pricing and other metrics has been structured data, associated with policyholders and obtained officially.

Unstructured data, such as that obtained from social media and other unofficial channels, can be helpful, or potentially even more useful, according to CSC, which merged with Xchanging earlier in 2016. 

Useful unstructured data might already be available, CSC and Xchanging said. The Insurance Market Repository (IMR), for example, is an Xchanging project, that they cited as one source of such information.

“In many cases, the insurers do not see the IMR as a data asset, but more like an electronic filing cabinet,” said Patrick Molineux, insurance manager at CSC for the UK, Ireland and Netherlands.

“Many in the market don’t see the value of unstructured data in insurance. This data has huge value in commercial and specialty lines,” he said.  

Adrian Guttridge, executive director of insurance at Xchanging, said: “There are often recurring themes in the claims process, but if the data is not parsed and interpreted correctly then it becomes unusable and an opportunity to cut down on costs may be lost."

Harnessing data and analytics is central to many technological innovations within the re/insurance world. Molineux and Guttridge discussed the new breed of "instech" startups feared as harbingers of disruption by some in insurance.

“While big players have an obvious advantage in brand reach, marketing and personnel, startups are thinking about completely different business models, coming from the outside in," said Guttridge.

"The barrier for entry is also much lower for them than it was for the larger companies, back in the day.  The disadvantage for them is that their ideas are easily replicated by the big players once they go public, and carriers and brokers are starting to look wider than their core business,” he continued.

Some of the largest re/insurers have backed their own innovative technology-based products. Lemonade, for example, is the peer-to-peer insurance startup which opened in New York this year.

Lemonade has been funded by XL Innovate, the venture capital arm of XL Group, with a brief to find and invest in potentially profitable startups across sectors, from renewable energy to insurance. 

Other companies are seeking to do the same: building operations around new technology; rather than leveraging it as an afterthought.

Dynamis is an upcoming peer-to-peer insurer deploying blockchain distributed ledger technology, touted for widespread re/insurance use after being pioneered by online currency Bitcoin.

Others are also pushing for the relatively untapped resource of unstructured data to be recognised by insurers.

Inga Beale, Lloyd’s CEO, has supported increased use of untapped unstructured data to inform underwriting decisions.

“There’s a lot of unstructured data out there, for us we’ve got to get our heads around that," she said, speaking at an event held by the American Security project in October.

"We’re used to using very structured data, but we’ve got to try and bring that unstructured data into our world and use it for analysing risks,” Beale added.   

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