As digitization deepens by the day allowing for the unthinkable to play out, businesses and organisations are well aware that the key to remaining relevant in various lines of business is rethinking strategy to suit the on-going trend.
The ambiance of the present is characterized by deep learning and Artificial Intelligence (AI), Internet of Things (IoT), amongst other digitization tools helping organisations to grow and reach vast customers within a short space. In line with this, insurance firms are beginning to open up to novel strategies as opposed to traditional practices. Today, lots of insurers are fast embracing open data whilst jettisoning silo.
Open Data vs. Data Silo
Usually, internal departments such as finance, administration, HR, and others need different information to do their work. Data silo is a collection of data held by one group that is not easily or fully accessible by other groups. From a broader view, data silo involves data hoarding by one organisation from another organisation.
Before big data and the cloud revolutionized business, different departments tended to create and manage their own data as each department has its own policies, procedures, and goals. However, recent studies have revealed that data silos could serve as a bane to organisations as it undermines productivity, hinders insights, and obstructs collaboration.
However, experts have recommended that silos can become less of a barrier when centralized and optimized for analysis. A centralized database is one where the information is collected, stored, and maintained in one location, but is accessible from many points. As a rule, this means using one central database system or mainframe.
On the other hand, open data revolves around the willingness to share data with a variety of businesses and sectors. By doing this, industry analysts say, insurance providers will have access to insight into consumer needs and help them predict future demand with more accuracy.
Why should insurers share data?
The concept of open data is yet to gain popularity in many parts of the African continent because insurers still question why data should be shared with competitors when it could actually be kept away from others to serve as an advantage to holders.But as Adedamola Oloko, a proponent of insurtech in Africa puts it, the insurance business is a data driven business which requires data collection and assessment. In this regard, open data is fast becoming essential to providing an exceptional customer experience.
The advantages of open data are numerous. For instance, using open application programming interface (API) allows insurance companies to increase their potential customer base. They can list their services and offers on comparison websites or have a mutually beneficial partnership with other businesses.
Similarly, car dealers, vets or travel agents can benefit from this by registering as affiliates and providing their customers with unique URLs that insurer can track and pay referral fees on. In addition, this could also allow insurers to get clear data that let insurers provide more competitive premiums. For instance, the use of connected devices in delivery vans, which can report on traffic and road surface conditions and feed data back to the insurer in exchange for lower premiums; or health insurers encouraging members to connect their fitness tracker and weight-management accounts to their insurance app in exchange for benefits like cash back, or partner offers.
Insurers need to be familiar with open data
Insurers that continue to resist change for fear of their competitors seeing their data will eventually lose out to competition. Consumers these days want bespoke products that are useful for them as individuals. That might include automotive insurance that uses their data to provide the fairest premium, rather than penalizing them for an entire demographic’s behaviour.
Customers want claims to be handled quickly with minimal paperwork. APIs driven by open data, allow insurers to get a much clearer picture of what the customer wants and how they can provide it. Consumers are becoming more confident in using apps and in switching providers, as a result any resistance to change is likely to do nothing more than alienate customers. Traditional insurers should embrace open data principles and partner with these providers.
Technology will only become more interconnected and open. As artificial intelligence and data analytics become more common-place, insurers will understand more about how these technologies and processes can help them improve their operations and adapt their business models.
In recent times, insurers have opted to use modern technologies to digitize claims processing, process data intelligently, detect fraud, gain transparency around claims histories and prevent claims. By becoming familiar with these technologies and embracing open data, insurers can not only stay competitive now but future-proof their businesses against changing customer needs.
Insurers that want to see the maximum benefit from digitization need to shift their culture and business practices to embrace the concept of open data.
Frontpage February 24, 2020