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Insurers turn to big data to help identify risks

18/09/2014 by


Insurance companies are increasingly turning to "big data" from satellites, social media and even cigarette sales at gas stations to help identify risks and build up customer profiles.

Insurers and reinsurers hope that real-time analysis of data about personal behavior will enable them to project damage claims and fine-tune prices to fit the risk being covered, and also help them spot fraud.

Troves of data are being collected via the technology phenomenon known as the Internet of Things, where cheap, network-connected sensor devices are embedded in all manner of industrial equipment, transport vehicles, appliances in the home and even the health monitors and smartwatches that consumers have begun to wear on their wrists.

Hamilton Re Ltd., a new Bermuda-based reinsurer, hopes that heavy data-crunching technology will give it an advantage over rivals and boost its bottom line.

"If we do it successfully, we ought to be able to deliver our products at lower cost with an improved loss ratio," said Bob Deutsch, chief strategy officer for the group.

"In underwriting, you have a better ability to plot whether you've got a concentration of risk in certain aspects of tornado alley," Mr. Deutsch told Reuters on the sidelines of the annual conference of the reinsurance industry in Monte Carlo, Monaco, this week.

Insurers have long struggled with flawed information on policy and claims forms, according to Maurice Tulloch, CEO of U.K. and Ireland General Insurance at Aviva P.L.C., which has about 500 professionals working on data analytics.

"Of the data we get back, a third of it is generally incorrect," Mr. Tulloch told the conference, referring to traditional data collection.

Information from satellites, medical data from fitness devices, social media activity, construction plans, rainfall, storm drain systems, energy efficiency, and cameras monitoring road surfaces can all be put to use by insurance companies.

The growing mountains of data available for analysis could raise knotty privacy questions, although, for the most part, the data the insurance industry is looking to pore over is aggregate data about collective behaviors rather than information that can be linked back to individuals. 

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