Big data is a big theme right now. How organisations are trying to capture and make sense of the mass of unstructured data that is generated by our daily lives online. Google looks for specific words in our Gmails to find out what products we want. Retailers want to send us adverts at the time when we are most likely to buy. And some insurers try to build up a picture of how we behave, what type of person we are, and how risky a customer we are.
Don’t cut corners
For customers, this can mean better products. For motor insurance, it might make a lot of sense to have a tracker in the car to see how we drive, get feedback so we can improve our driving, and get an insurance quote that reflects how safe a driver we are. The cost of our insurance can fall if we continue to improve. Motor telematics products have helped thousands of young drivers get cheaper insurance.
An Apple a day
Data tracking can benefit customers for health insurance. Similar to the information on our driving, we can wear devices to see how active we are and our heart rate. We can receive feedback so we can get fitter. Soon we will be able to get an insurance quote that is based on the data, and premiums that reduce as the data shows our health is improving. Health apps on our phones will be part of how that develops.
Home sweet home
It is the same for home insurance? Connected home products can give useful data, particularly on whether boilers are working properly, or whether pipes are leaking. They can show if doors are locked. Also insurers can see what type of person we are from Big Data analysis (what we buy online, what we are saying on social media) and that can help make a profile of how we live and whether we are careful or careless, so more or less likely to look after our property.
But there are real limitations for home insurance. How much damage a house might suffer in a flood isn’t just related to its GPS position, it might be due to how water flows down the hill. How likely a property is to be burgled might depend on how easily the front door can be seen from the street at night – Google Maps doesn’t update frequently enough for that.
Listen to the customer
At PolicyCastle, we believe that insurers providing quotes based on a detailed understanding of their customers’ individual situations is the way forward. But Big Data isn’t going to provide all the answers. Detailed information, particularly for home insurance, will have to come from the customer.