Ever since it was the main sense of business for insurance companies to settle claims caused by accident or damage. Big data and predictive analytics have the potential to change this business model by predicting and preventing claims.
New technologies such as the Internet of Things (IoT) offer a complete new approach to the business model of insurance companies. By collecting, analyzing and using all sorts of data send by insured customers or insured assets insurance companies have a much better chance to prevent damages or accidents even before a claim is occurring.
In order to create this kind of business model insurance companies need to get hold of important data concerning the state of insured assets and customers as well as causes of damage at every possible point. This business approach requires a new alignment with all sorts of manufacturers in order to allow the provision of relevant data. Insurance companies therefore need to create dynamic business networks with all sorts of organizations such as car manufacturers, machinery suppliers as well as health institutions to collect and analyse relevant data.
This new kind of business model requires new competencies within insurance companies and new roles such as network managers and data analysts. It will help insurance companies to improve their claim statistics and dramatically reduce claim volumes. This approach landmarks a forward integration of insurance companies to significantly increase profits. While collecting customer’s data and reducing claim volume insurance companies can offer much better conditions to customers helping to prevent accidents or damages. This will finally lead to a win-win situation for customers and insurance companies.
At the same time this kind of business approach offers a new chance for aggressive start-ups and data specialists to step into this market. Established insurance companies are well-advised to start their data activities right now and learn how to profit from using Big Data to extend their current business model.