The life insurance sector has lagged behind in its use of big data to engage its customers despite having collected a range of data for many years, according to MLC Life Insurance Chief Executive Officer, David Hackett.
“For many years and in many ways life insurers have been into big data, particularly around issues of underwriting and risk in large populations but this data has been fairly static and unused outside its original application,” Hackett said.
“Computing and technology have moved on and the ability to handle more sources of information has only been a recent development,” he added.
Despite this, Hackett said more could be done to use data collected by insurers to reduce claim times and create tailored products, with recent research released by MLC Life Insurance supporting that view.
The Big Data in Life Insurance report, commissioned in conjunction with the Financial Services Council (FSC) and research firm EY Sweeney, found the life insurance sector was lagging in the use of big data relative to other industries despite the benefits in reducing costs and time for insurers and consumers.
“life insurers have been into big data…but this data has been fairly static and unused outside its original application”
“There is enough evidence from other industries, such as healthcare and technology, to show customers are getting better service and products when more information is available. The same benefits could be realised for the life insurance industry,” Hackett said.
“While there is still a lot we don’t know about Big Data, now is the time for our industry to invest in it to innovate practices where customer experience has perhaps been sub-optimal in recent times, particularly around the processing of claims,” he stated.
The report stated big data could be used to restructure products around the personal risks and financial circumstances of consumers while also predicting the likelihood of a claim from individual clients and pricing that risk accordingly.
The report also pointed towards efficiency gains within life insurers with increased knowledge allowing for less manual administration when making a claim resulting in faster payment of claims.
Hackett said MLC’s own recent shift into big data, via its OnTrack health and wellness program, opened up deeper engagement with policy holders while providing more accurate underwriting and product data to the insurer.
He admitted consumers may be wary about supplying data to a life insurer but many wanted to their life insurance to be present for the long term and that was difficult with the current assymetric data flow.
“More data gives us better access to risk and allows people to learn more about themselves and we believe they will be prepared to share with trusted providers if they can see mutual benefits for both parties,” Hackett said.
