As more sources of data become available, how can insurers ensure they extract value from the data generated by new technologies?
Last week, Cytora CEO and co-founder Richard Hartley offered his perspective on connected data during the “Connected Insurance: Effective Use of Data Science” panel, held in London at the Morgan Stanley European Financials Conference.
Hartley was joined on stage by Matteo Carbone, Founder and Director of Connected Insurance Observatory, and Jon Hocking, Managing Director and Head of European Insurance Equity Research at Morgan Stanley.
The audience named motor insurance the most promising use of connected devices, and data privacy as the greatest obstacle to delivering connected insurance. They also predicted AI and robotics would be the most disruptive technologies for the insurance industry.
“We find artificial intelligence can outperform manual underwriting for SME lines, in terms of predicting future claims cost,” said Hartley. “We take satellite, government, even weather data such as the number of frost days, and we use whatever data is predictive.
“The history of insurance has been a race to gain experience. If you’re a small company, the question is how you compete with Chubb and their knowledge of exposure and claims. If you can get and use data from other sources, you can begin to compete effectively.
The most successful insurers will combine all the different types of data to get information on selection and price. We help insurers utilise the full stack of available information.”
New IoT-enabled devices and sensors enable the real-time capture of data that insurers can use to measure performance and improve operations. To extract value from these new data streams, insurers are increasingly seeking partnerships with specialist data analytic companies.
“For Cytora, the combination of different types of data is most interesting,” said Hartley. “Many people make the mistake of saying ‘we do satellite data’. But it’s better to rapidly integrate data from multiple sources to get to a price. We help insurers utilise the full stack of available data.”
When asked about the biggest challenges of working with the commercial insurance industry, Hartley said:
“The customers we partner with all have a board level vision of transformation. They have a five-year vision to machine-write a certain volume of business. We always focus on the long-term, on helping them to achieve these strategic goals.”