It is no longer good enough to have access to Big Data. For insurers to be truly competitive in the digital environment, they need to leverage smart data to drive better decision-making. Kelly Preston, data analytics manager at SilverBridge, looks at how this evolution is going to be the next strategic priority for the modern insurance company.
“Collecting massive amounts of data has become routine. Typically, one tends to think that the more [data] you have access to, the better. However, a reductionist approach can often be better when it comes to the vast amounts of information insurers have access to,” she says.
But what is the difference between Big Data and smart data? The former encompasses what is referred to as the five Vs – volume, velocity, variety, value, and veracity. Smart data is all about the last two Vs (value and veracity). Looking beyond the jargon, smart data is Big Data turned into something that is actionable in real-time for a variety of business outcomes.
“Smart data provides the ability to understand how the data fits in with the people behind the numbers. This means an insurer can turn large volumes of data into a narrative with analysis that provides insights on the effectiveness of business strategy. By using smaller data sets, a clearer understanding can be had to address customer and business challenges,” says Preston.
Even though insurers know a great deal about their products, services, and distribution channels, there is still a gap in understanding their customers. Smart data helps to bridge this gap. It is not only this gap that smart data helps to bridge. Previously, the ability to gain quicker, better insights into business, by using data, required a highly specialised level of expertise. Smart data essentially makes data, and the insights available from it, easy to access and work with. The rise of smart data allows for the average business user to understand the story behind the data without needing technical knowledge or a flair for data.
“If insurers invest in identifying the right questions to ask from Big Data and then couple those questions with smart, probability-based analytics, insights can start to flow very quickly. But for this to be successful, it is imperative to think outside the box. Smart data is best used when the insurer is focused on creating new areas for improvement or value creation instead of simply using the data to reveal things they already know about the business.”
An example of how this could work entails gaining insights by integrating social media data and claims data to identify potential fraudulent activity.
“In an increasingly competitive market, adding more data is not the answer but using semantics attached to data is as it gives meaning to what the insurer has access to. Smart data has the potential to unlock value and insight in analysis, business intelligence, and decision support. Data only becomes smart if it is used in an intelligent manner. And then it has all the potential to empower insurers to make decisions faster than before,” she concludes.