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Big Data, Process Innovation Can Help Insurers Control Costs

Joshua Hoffman
March 10, 2015

The auto insurance industry is in the midst of a big data revolution that could play a vital role in keeping customer costs under control. Rising premiums can lead to consumers becoming dissatisfied with their insurance companies and choosing to cut coverage. Insurers that want to avoid this problem and maintain their customer base increasingly need to find ways to improve their operational efficiency to reduce expenses. Bid data is emerging as a solution, and automotive telematics systems are showcasing how having the right information can unlock operational efficiency.

"Insurers can use information from big data sources to unlock their full potential."

Understanding the cost problem in auto insurance

A recent report from The Legal Examiner explained that auto insurance premiums are rising so quickly that new payment models are beginning to emerge within the industry. Citing J.D. Power and Associates, the news source explained that average auto insurance premiums rose by 35 percent between 2012 and 2013, and costs are a mounting problem in the sector. The result has been a move to use data to understand how drivers operate more effectively, allowing insurers to continually adjust rates based on real-time data. The rise of vehicle telematics has proven key in this process.

Looking at the potential offered through telematics

According to a recent Property Casualty 360 report, telematics is emerging as something of a silver bullet in the insurance sector, andErnie Bray, CEO of ACD, explained that telematics won't just impact premiums, it will also make it easier to handle claims efficiently.

"First notice of loss could happen instantly without the customer even making a telephone call," Bray told the news source. "Data from sensors would instantly report details including location, panels and parts damaged and potentially instant estimates. Furthermore, current black box systems for accident reconstruction are difficult to review and specialists are needed. With newer applications coming into the market, data will be easier to parse allowing adjuster access to information they never had before such as speed, location, braking, exact moments in time."


Big data and process advances can fuel innovation in auto insurance.

Adjust processes to meet new demands

Bray's comments highlight the importance of business process management in light of telematics advances. BPM tools put data in context by aligning data and processes within applications to help users improve decision making and work more efficiently. This is accomplished through a combination of process automation for repeatable tasks and using BPM as an application platform to use code-less programming to build process and data management into the apps that insurers are using every day. The result is an environment in which insurers can take the information they are getting from telematics systems and other big data sources and use it to unlock their full potential while reducing costs for customers.