Artificial intelligence, big data and connected objects: the complementary trio for insurance

By Kevin Kanga, Senior Consultant Square Management.

Big data and connected objects, what uses for insurers?

Appearing towards the end of the 90s and some time after artificial intelligence, big data is defined as the volume of heterogeneous and massive data that conventional database management tools cannot process.

Big data is also described through its “3Vs”: the volume which refers to the quantity of data; the variety relating to the constitution of data (structured and unstructured) and requiring specific processing (data mining); and finally the velocity which corresponds to the speed of circulation of the data and their processing in real time.

To these “3V” is added the value drawn from these data. Indeed, once collected, the data is not only intended to be stored. It follows a life cycle, a course, enriched with additional information such as our daily habits or our emotions, which are strong markers for insurers.

With data of this value, insurers will be able to make the most of the advantages of AI to:
– Optimize internal processes and have a better knowledge of customer profiles: the implementation of chatbots, capable of responding in real time to requests from policyholders, allows customer relationship services to focus on actions with greater added value. Customers find answers to their questions without systematically requesting human intervention;
– Guarantee faster compensation in the event of a claim: thanks to the data communicated by the insured, the insurer can automate the handling of the claim, particularly for the first reliability checks. For example, algorithms have been developed, making it possible to detect automated fraud based on photos or documents;
– Analyze customer loyalty by adapting insurance products to the habits of policyholders: suggestion engines will adapt cross-sell proposals according to the profile and behavior of the policyholder.

In the field of health insurance, health data make it possible to have a better knowledge of illnesses, to better assess their impact on humans and to offer fairer and more inclusive coverage. This can have a snowball effect and reduce spending in the health sector.

Some advantages of using big data
– Better knowledge of customer profiles
– Analysis of loyalty by adapting insurance products

In addition, connected objects contribute greatly to the increase in the collection of this precious data, this black gold of digital or even called “digital raw material” according to BPI France. They are able to store them and provide primary processing.

Estimated at around 12 billion in 2021, the number of connected objects will reach the threshold of 30 billion by 2025 (Iot Analytics. 2022). Some insurers use these objections to develop and market new offers.

Car insurance is a good example via the “Pay how you drive” formula. This is a concept used by insurers to reduce the insurance premium of good drivers as a reward for good driving.

Thanks to a connected box that is installed on the insured’s car, it is possible to collect as much information as possible and adapt the pricing to the actual use that the driver has of his vehicle. A driver’s score is thus produced and integrated into a digital platform which models the bonuses in real time (example of the Drive Safely technology). It is also possible to benefit from an evaluation of the driving behavior of drivers, follow their journeys and receive, through the alert system, personalized prevention advice to improve their driving. Several insurers will gradually follow suit in this race towards the personalization of the offer.

Presented in this way, connected objects, big data and artificial intelligence are interdependent and together form the complete structure of the technological revolution. One being the entry point of the data, the second, considered as the fuel continuously feeding the machine, and the last, the brain. In this ongoing revolution, the issue of data security remains an essential concern for policyholders and inspection bodies. From there to limit the technological ambitions of the actors of the place, the question arises.

We would like to say thanks to the writer of this post for this outstanding material

Artificial intelligence, big data and connected objects: the complementary trio for insurance


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