By FINTECH Books Contributor, Dror Katzav Follow: @drorkatzav Life Insurance companies have existed since the beginning of modern times, perhaps as far back as Hammurabi – 1700 BC. Data was always key to success as exemplified by Edmund Hallevy’s life table that dates back to 1693. The logic is clear: information allows smart decisions, informed risk taking, and consequently, success. Being smart is getting tougher with time. Data is becoming increasingly cheap, open and accessible. More importantly, with vast amounts of information, intuition does not suffice. There is a need for a paradigm shift. Retail was unchanged for many years: customers went to their nearest grocery store and bought milk and vegetables. They knew the grocer and it was a personal experience, and for years, was the only way to shop. Data contributed vastly to changing this industry for good. Insurance is going through the same transformation. The objective – providing valuable insurance profitably – is still the same. The method still has the same ingredients – risk analysis, capital deployment and claim settlement, yet the means of doing so has changed. Existing insurance systems were built to serve a purpose: collect prms, collect claims and standard bookkeeping. They were built many years ago with the technical constraints at that time and there was no foresight regarding collecting data for analysis. This is where the paradigm shift appears; making the data work not only for its narrow purpose, but for the purpose of understanding the business. What does it take to utilize modern data tools effectively and efficiently? Designing processes for data collection, analysis, and reporting; training people to participate in all stages of processes and to support their actions with data analysis results; building and availing decision support tools (monitoring/dash boards, alert). This is the data driven paradigm.