Big Data & Analytics: The algorithm of modern business CROs in a changing environment

Data Driven Innovation Open Summit – Roma, 20 May 2016

Stefano Nanni

Big Data has become mainstream Big Data in the insurance value chain Engagement through Big Data in

Health insurance Motor insurance

Conclusion from the cases The CRO’s role under a new light

Agenda

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Reference paper

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Big Data has become mainstream

The Big Data market is growing seven times faster than the general IT market

(Communication from the European Commission issued on 6 May 2015 - A Digital

Single Market Strategy for Europe).

The number of US insurers using Big Data has more than doubled just between 2013

and 2014, reaching 39% of the players with written premiums over $1B (SMA White

Paper 2014 - Big Data in Insurance).

The Big Data definition is still far from clear Massive data analysis

Combination of different information sources

Anything that won't fit in Excel…

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Data from digital interaction and sensors allows refined customer profiling both during the marketing and servicing phase, thus leading to personalized solutions that better suit customer needs.

Tailored services based on a higher number of touch points increase customer engagement and retention while improving risk assessment and loss prevention.

Easier to encourage and reward safe or healthy behavior.

The holder of a travel policy could revise his travel plan and so receive advice and alerts, or the holder of a motor policy could communicate digitally the maintenance status of his vehicle and so receive price incentives.

A semantic engine can be used to continuously identify relevant news on selected corporations from the Web and so enable Fire and Theft predictive underwriting.

Claims processing becomes faster and more reliable thanks to the integration of telematic and cartographic data while fraud cases are more easily identified detecting fraud rings based on Internet, social media and company data.

Big Data in the insurance value chain (1/2)

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Big Data in the insurance value chain (2/2)

Big Data improves the insurer’s relationship with policyholders andbuilds upon additional information on covered risks

Reinsurer

Risk identificationRisk segmentationPredictive UWRisk selectionRisk monitoring

Regulatory EnvironmentPrivacyData ProtectionData Security

InsurerPolicyCapacity

ServicesAdditional Data-DrivenServices

Customer profilingCustomer engagementCustomer retentionTailored servicesBehavioural incentivesClaims settlementFraud prevention

Environment

Covered Risk

Life & Health Property & Casualty

Policy Holder

Ownership

Advanced Analytics

Behavioural DataRisk DataClaims Data

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Two main goals: risk identification and customer satisfaction.

Observation from patient monitoring is a highly valuable information asset to define reliable long-term cost trends.

A higher degree of market specification based on Big Data insights contributes a more reliable medical underwriting decision, an identification of additional insurability and a rejection of uncontrollable risks.

Analysis proves that the cancellation rates are clearly lower for participating insureds than for other chronic patients.

It is crucial that insurance companies adhere to the legal framework.

Engagement through Big Data in health insurance (1/2)

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Engagement through Big Data in health insurance (2/2)

Individualized care helps patients to live better with their diseases

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Engagement through Big Data in motor insurance (1/2)

Big Data & Analytics allow the collection of a variety of information that can lead to mutual advantage for both insurers and policy holders.

Insured drivers can learn about their driving behavior having fun at same time, and all this data can turn into a lower price.

More favorable and tailored pricing but also:

New products and services with dynamic pricing.

Improving loss prevention (gamification influencing drivers’ behavior).

Additional services (e.g. emergency services).

New cross-selling opportunities and third party services.

Again, it is crucial that insurance companies adhere to the legal framework.

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Engagement through Big Data in motor insurance (2/2)

Engagement and feedback make the customer experience more enjoyable

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Conclusion from the cases

Big Data & Analytics have a strong potential to improve the quality of life of chronic patients by improved disease management programs as well as the driving behavior of insureds by motor telematics.

A greater client retention is a key result due to personal benefits, additional services and price advantages.

Strong analytical capabilities and access to appropriate data are key requirements for successful implementations.

Furthermore, both examples show that customers should understand the processing of their own data and should be able to give open consent to its use.

New practices are needed to establish partnerships with startups and entities from different industries.

Insurers, accepting their data controller role, must work within sure legal borders.

The integration of insurance, services and technology iskey to building a distinctive customer value proposition

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The CRO’s role under a new light

Each opportunity also carries risks. What are these risks and what arethe best ways to manage them?