Gathering and Harvesting New Data through “The Connected Life”

The Connected Life, the digital life is steadily emerging. Today’s insurance consumers are increasingly tech savvy and want services on demand and expect them to be readily accessible anywhere, anytime. Because of this, the insurance industry and more specifically, the personal property and casualty insurance sector, is experiencing a significant period of change and opportunity. The primary change agent in this disruption is the significant amount of specific data that an insurance organization can gain for individual policyholders or prospective policyholders in this era of the Internet of Everything.

An industry steeped in tradition, legacy systems, conservative business practices and risk avoidance is now faced with the need for significant, rapid adoption of new technology accompanied by new data analytics models. This change is in-progress and data from the connected car, connected home and connected person is being gathered. The challenge facing the Insurance organization is not the data gathering, but the management, mining and “harvesting” of this expansive data. In fact, Cisco acknowledges five pillars in this space: Connect, Collect, Analyze, Decide and Apply. Focusing only on the first two areas of Connect and Collect will not provide an advantage over competitors. The key focus areas that will bring true value to insurers are Analyze, Decide, and Apply.

Put simply, a competitive advantage can be achieved by those organizations who effectively “harvest” newly gathered data from connected life solutions. Virtually all property and casualty insurance organizations with a top 100 ranking are investigating, testing, piloting or commercially deploying “Big Data” initiatives. These data gathering initiatives include connected vehicle/telematics, connected home and connected health of the individual, and further include value-added offerings for the consumer, while providing the opportunity for insurers to learn a lot about the policyholder or a prospective policyholder.

Connected Life Offerings

Through Connected Life offerings and consumers’ “digital shadow”, insurance organizations could have the ability to acquire significant new data and:

  • Gain “First Mover Advantage”
  • Gain “early look” at data enabling pricing model advantages
  • Convey brand as an innovator
  • Enable improved risk assessment for pricing models
  • Enable Actuary and Underwriting access to integrated data streams of Auto, Home, and Health

There are a number of lifestyle areas to be explored as they relate to the Connected Life including:

Connected Auto

Connected Auto utilizes vehicular telematics technology such as GPS navigation, On-board diagnostic-II (OBD-II) devices, integrated hands-free cell phones, wireless safety communications and automatic driving assistance systems. Automatic Crash Detection (ACD) is an example of Connected Auto and is a new telematics solution area that utilizes accident event data to immediately and automatically alert an insurance organization that an event has occurred. This has significant business value-add to the claims organization of an insurance carrier and can have an immediate impact on reducing fraud and reducing a claims payout. Through Connected Auto solutions, claims departments can gain a targeted set of data that they can understand and use immediately. Connected Auto solutions also provide analytics data to better enable pricing models and risk assessment. For the consumer, connected auto solutions coupled with safe driving discount programs can help save money on vehicle insurance. Most offerings base how much the insured drives to determine the size of the discount, with good drivers receiving higher discounts.

Connected Home

The Connected Home is simply the latest manifestation of the ubiquity of connections within and between the physical and virtual worlds, and the seamlessness of the customer experience. While the “Internet of Things” has brought great attention to how various aspects of the home can now be connected to the Internet, the Connected Home is able to provide insurance carriers with significant data while also mitigating homeowner risk by the use of hubs, sensors and detectors and information the home owner can use. There is a significant focus on the property line of business for property and casualty insurance organizations, as the property/home policy can provide a pull through for the auto policy and an anchor against churn as the auto environment becomes more commoditized.

Business Analytics

Many insurance carriers are looking for assistance in how to “harvest” the massive amounts of data they are now acquiring through Connected Life (Connected Home and Connected Auto) programs. The data collection programs have a cost associated with them and if the acquired data is not utilized, the value of the program is not monetized. The ability to understand the data, organize the data and to make business sense out of the data is a phase that many insurance organizations are entering. The actuary organizations are generally being tasked with this phase, but may not be capable of achieving success without assistance. This presents an opportunity to introduce ecosystem partners who can help subsidize the efforts.

Deriving Business Value

As Joe Chow states in the video linked to above, “Cisco is at the forefront of the digital life, the connected life and bringing flexible hardware options to market and helping insurance carriers by providing them with management tools that help simplify service delivery and increase customer satisfaction. Cisco is working to bring together applications and services that go beyond video, data, and voice. This will help businesses who are looking to connect to their customers to unlock new revenue streams and strengthen customer relationships. The insurance carriers who will achieve the highest success in working with their customers are those who recognize these business-transforming capabilities and who can bring immediate value to the insurance organizations.

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Brent Boxell

Practice Advisor – Insurance

Financial Services, Business Transformation, Cisco Systems, Inc.