How online data could transform the insurance sector’s relationship with corporate risk – Luminati

The insurance industry has changed beyond recognition over its long history, but one thing which has never wavered is the eagerness of insurers to use every potential source of data to minimize their risk and maximize their reward.

Though today’s insurers are fortunately no longer relying on astrology or patterns in animal entrails to divine the future like the Ancient Greeks did, they are rapidly moving towards using sources of data which some might consider to be unorthodox.

Though you might not initially consider social media to be a treasure trove of data when it comes to insurance underwriting, the online data available on social media is providing valuable real-time insights for companies, informing everything from the credit worthiness of current or potential clients, partners or competitors.

For instance, if a company’s LinkedIn profile shows an unexpected change in its workforce, this could suggest financial developments (for better or for worse) of that company. This publicly available data, and the fact that you have collected it before anything has been officially announced, gives your own company a valuable competitive edge in decision-making.

With Covid-19 continuing to disrupt companies’ business models, it’s no wonder that insurers in an increasingly competitive environment are turning more and more to alternative sources of data.

The many websites that offer free, publicly available online data with which to calculate risk premiums are proving particularly valuable to insurers.

This includes sites like CrunchBase, which offer a wide range of constantly updated financial information regarding companies’ futures.

Preventing fraud 

The pandemic has put significant pressure on the insurance industry. Not only has Covid-19 forced insurers to pay out billions in insurance payments (Lloyds of London is expected to pay out over £5bn of insurance payments), it has caused a distinct uptick in fraud attempts.

This is an unfortunate consequence brought on by today’s challenging economic times, which has left many businesses feeling desperate enough to try to file fraudulent insurance claims.

The industry expects to see an increase in fraudulent insurance claims reminiscent of the 17 per cent increase that occurred post-2008 recession.

Amid the increase in expected payouts and the increased pressure to decipher fraudulent insurance claims from valid ones, today’s insurance companies, many of which have downsized because of the pandemic, will most likely encounter staffing issues while processing these claims.

This is where automated online data collections solutions can help insurers – not only can these tools use freely available online data to check insurance claims, but they can verify claims faster with more reliable results, in a way that would be impossible with human labor alone.

This works by using online data to get to the bottom of any discrepancies between a business’s online profile and their claim. But simply having access to online data is not enough - automated online data collection solutions are imperative in this assessment process because large enterprises are continuously producing and updating relevant details that need to be analyzed and cross referenced.

This is because certain details, like stock prices or key employees, are constantly changing and are almost impossible to keep track of manually. Therefore, an ongoing automated data collection solution is necessary. Plus, with more data to work with on a continuous basis, identifying and thus stopping fraudulent claims becomes easier. In addition, processing and paying out honest claims can be done faster, helping the businesses that truly need it.

Given that the pandemic and its economic consequences show no signs of dissipating, the insurance industry can only expect additional increases in insurance claims.

Therefore, automating as much of the data collection process as possible provides insurers with the ability and infrastructure needed to keep pace with the level of claims that will need to be assessed.

Automation is key to underwriting 

Collecting all the available and relevant online data that is needed to verify insurance claims is both challenging and time consuming.

A solution that can provide increased efficiency and accuracy is to implement some form of automated online data collection.

This significantly increases the amount of data that can be collected, especially when compared to traditional, more manual data collection methods that involve filling out forms by hand.

Having access to more data simply improves the risk assessment and underwriting process.

Automated data collection can also help insurers who are trying to determine the creditworthiness of a struggling company.

For example, with a hotel chain, you can collect public data from the chain’s website, or from third parties like a booking site to check room availability and the prices that are being charged in popular locations.

This information will help fill in any missing pieces that more traditional sources of data don’t address.

These types of real-time insights coupled with other relevant data, like stock prices or corporate news, give insurers a fuller picture at a faster pace than other more traditional data sources, like company or analyst reports can.

Shaping the future of insurance 

As we’ve established, collecting a large amount of online data is necessary to remain competitive in today’s insurance industry.

And having the right data collection tools is an important part of enabling businesses to collect the data at the scale and pace that is needed.

Many websites currently block activity that seems to be coming either from competitors trying to get data or that looks like malicious activity (botnets).

The result is that the information available to typical consumers is not the same as what businesses can see. Therefore, if you are an insurer, it’s recommended that you use a data collection network based on residential IP addresses willingly contributed by consumers around the world.

Doing so will allow your business to appear, for example, just as a typical consumer based in Hong Kong using an Android device would or a consumer based in Toronto, using an iPhone device.

With 2021 fast approaching, the insurance industry should prepare itself for an influx of claims, both honest and fraudulent. But having access to massive streams of continuous data will help insurers be able to process them accurately and quickly.

It won’t be enough to just embrace publicly available online data; companies will need to implement automated data collection solutions in order to keep up in an increasingly competitive and modern data-driven insurance industry.