Analytics for Insurance. Tony BoobierЧитать онлайн книгу.
customer and more towards the management of financial performance and risk.
■ Reinsurance
■ Captives.
Table 1.4 Key drivers of reinsurers and captives
1.2.2 The Role of Intermediaries
Insurers do not operate in a vacuum but rather depend on third parties to help them discharge their obligations, or optimize their operations. If insurers have an interest in Big Data and Analytics, then so too must their intermediaries. Such ‘intermediaries’ include:
■ Tied Agents – A company sales person who promotes the products of their employer only. Under section 39 of the Financial Services Markets Act 2000 (FSMA) they must make their status clear to the applicant/purchaser at the earliest opportunity.
■ Independent Agents – Also known as an insurance sales agent or ‘producer,’ the independent agent usually sells a variety of insurance products and is paid a commission or remuneration. Usually the independent agent is an independent contractor, often with an individual business. National Alliance Research indicates that on average an independent (US) agent concurrently works with 13 property and casualty insurers, and six life insurers on a regular basis.
■ Loss Adjusters – Independent or tied claims specialists whose duty is to administer a submitted claim within the terms and conditions of the policy. The expression ‘adjuster’ leads many to believe that the role of the professional involved is one of adjusting, or ‘reducing’ the claim as presented. Whilst that may the case in some instances, the profession can trace its roots back to the late 17th century and since that time they have been variously known as ‘valuers,’ ‘surveyors,’ ‘assessors’ and more recently ‘adjusters’ – a term which seems to have become more commonplace in the mid-1950s.
■ Repairers, Body Shops and Restoration Contractors – A broad group who are variously appointed either directly or indirectly by the insurer, or the policyholder in the event of a claim occurring. Their responsibility is to undertake the repair of either a property or vehicle to a prescribed required standard. This must be to the standard of the local building or construction regulation, or the required standards of the motor manufacturer. In the case of a restoration contractor, this function is usually initially to ‘stabilize’ the building following fire or flood prior to permanent works taking place. In some cases, the restoration contractor is able to undertake the permanent repairs.
These independent parties directly involved in the repair/fulfillment process came to the fore as a result of the desire of insurers to gain greater control over the repair process, usually in the light of claims costs increasing and also the impact of policyholder fraud. Historically the policyholder was invited to provide three estimates for a repair, and from time to time these were found to be provided by the same repairer albeit using different letterheads. (Astute claims handlers were usually able to identify spelling errors which were consistently made in each of the three estimates.)
In more recent times, as well as exercising better control over the process of repair, insurers have been able to secure cost discounts with these intermediaries based on volume and term agreements, e.g., two-year contracts or longer. In addition, this has also been presented to the policyholder customer as an ‘added value’ attribute, removing the burden of concern away from their customer at the moment of distress.
As with all parts of insurance, the specific business drivers for intermediaries (Table 1.5) are complex and will depend heavily on the nature of the intermediary involved.
Table 1.5 Key drivers of intermediaries
1.2.3 Geographical Perspectives
Not all insurance markets are moving at the same speed nor have the same level of maturity. Insurance penetration and market maturity tend to go hand in hand. This can potentially be analyzed by type of insurance and by geography, and micro segmentation helps allow analysis by demographic group.
It generally follows that insurance penetration directly correlates to the level of maturity in the banking sector. For example, with the exception of South Africa, the level of insurance penetration in the African nations is very low. Notwithstanding, the emergence of micro-insurance (insurance products whose purpose is to be both affordable and provide protection for low income people – those living on $1–$4 per day) has the potential to ‘buck the trend.’ Also this is a historical perspective – the rate of growth in the telecom industry in Africa may open the door to new thinking driven by the convergence of mobile technology and financial services. One other model which is beginning to emerge is the convergence of insurance with other industries, e.g., retail, which may lead to an acceleration of insurance market penetration and growth.
For the purpose of this publication, only a limited number of territories have been considered:
■ North America and Canada
■ Western Europe
■ China
■ Latin America.
These four groups of countries represent approximately 90 % of the insurance market as we currently know it. It is possible to identify some correlations between these territories, for example by contrasting growth markets with mature markets, but even these generalizations can be misleading as they can fail adequately to reflect the cultural and economic differences which prevail across vast regions.
1.2.4 Analytics and the Internet of Things
By 2020, everybody will have 5.1 connected devices, according to one management analyst and Gartner indicate that there will be 15 billion networked devices, many of which will be able to communicate with each other.
The concept of ‘Smart Devices’ isn't new, in fact starting off 20 years ago. High tech manufacturers such as LG and Samsung already offer ‘internet-enabled refrigeration.’ It is already possible to control the central heating remotely, and turn the lights off and on (or even just dim them) using an android phone. The increased popularity of mobile devices such as ‘Fitbit’ and ‘Jawbone,’ amongst others, is leading fashion companies and watchmakers to consider embedding devices in attractive jewelry and timepieces. We are rapidly entering the period of the Internet of Things (‘IoT’) with significant future impact on the insurance industry.
What are the consequences for insurance and insurers? Can we see over the horizon something which we might call the ‘Insurance of Things’ and if so, what is this and what will be the consequences? There is no doubt that Big Data and Analytics will play a part in this new environment. Enormous amounts of data will be created, analyzed and interpreted.
The use of connected devices is not entirely new in the insurance industry. The initial focus seems to have been on personal lines but will the next big wave of innovation find itself in the commercial sector? Whilst much of the focus has been on personal vehicle telematics, this is readily extended to vehicle fleet insurances. Some insurers have already obtained indirect benefit from a broad range of technologies from RFID (‘Radio Frequency Identification’) tagging of container shipments to monitoring of supply chain conditions to ensure fresh produce.
The Internet of Things in an insurance capacity will be considered later but starts to open up interesting new areas. Naturally there will be issues of security, standardization and privacy all to contend with, but these are topics which go beyond insurance and rather affect the ‘new’ modern world as we (currently) know it. If insurance in the future will be increasingly dependent on data and devices, where will the burden of maintaining and future-proofing those devices rest? Will insurance start to consider the introduction of new conditions and warrantees which are directly influenced by the new Big Data environment?
1.2.5 Scale Benefit – or Size Disadvantage?
Insurers are increasingly recognizing the value in their data but are often faced