large datasets derived help in market

Big Data in the Insurance Industry

Big data refers to extremely large datasets derived from many different kinds of sources: customer behaviour, financial transactions, social media, and even wearable devices. For the insurers, it can be very valuable to garner nuggets of knowledge about risk, preference, and behavior. Some of the most prominent areas of the insurance business are being transformed by big data:

1. Improved Risk Assessment Historically, insurers set premiums through historical data. Big data offers them the chance to look at real-time data concerning the lifestyle, driving habits, or health behaviour of a particular individual. For instance, telematics data allows car insurance to track the manner in which someone drives. Thereby, it offers UBI models where lower premium rates are ascertained for safer drivers.

2. Detection of Fraud Insurance fraud results in billions of losses to the industry every year. Big data with AI can help identify unusual patterns of claims, which may lead to fraudulent activities. For example, AI may identify unusual claims or trace the social activity of the customer on social media and then point out the inconsistencies in reports around incidents.

3. Tailor-made Policies The breadth of personal data accumulated from online activity, mobile apps, and connected devices will thus form a foundation for insurers to provide differentiated products and services. Physical exercise and health metrics that health insurers can track for their customers through fitness trackers and wearables will allow them to hence use that information to provide incentives in maintaining healthier lifestyles.