Data is each a present and a curse. Across all industries, corporations have more information at their fingertips than ever before. Yet not all organizations have the infrastructure or tech-savvy resources needed to efficiently exchange and unlock the advantages of all this data.
On the earth of insurance, access to data — and speed of sharing it — could make it easier to use for insurance, adapt to regulations, and forestall and detect fraud amongst other uses. Businesses that wish to take full advantage of all the information an organization collects need flexible systems, common standards, and adaptable processes. Quick and efficient exchange of data between MGA, insurance carrier, regulator, and other stakeholders allow for higher customer support, quicker payment of claims and expenses, and a more current view of the performance of a book of business.
This is particularly true for the insurance program segment of the P&C industry. Not only does technology improve the buying experience for the MGAs’ distribution network, nevertheless it also enables them to optimize risk selection, pricing, and underwriting to make sure the profitability of their portfolio. Technology can even increase efficiencies and enable differentiation, which may create a competitive advantage available in the market.
4 key considerations to optimize data for insurance uses
Optimizing technology will be daunting, but advancements aren’t slowing down anytime soon. As of 2021, almost a 3rd of U.S. corporations are actively using data to rework their business outcomes. Technology is reshaping the insurance industry, from claims, to distribution to underwriting and pricing. What can and will businesses do to remain ahead of the curve managing and integrating their data?
1. Understand your data model.
Every business is structured in a different way and has a singular data “language” that describes the data vital to their operations. Within the insurance industry this “language” often centers around describing policies, premiums, coverages, claims, invoicing, and customer data. For a business partner, akin to an MGA, to share its data with an insurance carrier, their data must “speak the identical language” because the insurance carrier. Some corporations have already got an information model which will need tweaking, while other corporations must start from scratch. Either way, knowledge of the present data model – and where it can have gaps for desired business purposes – is a great place to begin. The goal is to first understand how the information is organized, in addition to its intended business uses, so an organization can plan for sharing it.
There are a few P&C insurance industry data definitions business partners can use to exchange data more easily: ISO and ACORD.
- ISO has several standards related to insurance data, and focuses totally on standardizing the definition of forms, coverages, loss costs, and statistical reporting.
- ACORD defines standards around organizing and exchanging policy and claim details for specific insurance lines of business between corporations. These standards streamline data exchange, so organizations represent a policy or claim the identical way when integrating systems and processes.
Use of standards like these may end up in significantly less effort than having to spend time coming to an agreement on accomplish that from scratch. Whatever the standard used, the secret is to agree on one shared definition of insurance data to make use of together.
2. Engage in best practices for data security and privacy.
Insurance data often includes personal information that, within the improper hands, might be damaging. Protecting sensitive information is important, which is why there are rules and regulations that dictate the handling and sharing of information. It’s critical that insurance firms and their business partners work together to develop privacy and security standards and practices. Encryption is one such practice that helps protect the stealing and misuse of information. Essentially, it converts information into an encoded format that may’t be read or processed unless it’s decrypted by a trusted and authorized partner.
3. Expect regulatory change and prepare for it.
The character of the insurance industry is one in every of constant change, especially in the case of regulations on the state and federal level. If latest laws requires a change to be quickly implemented, getting access to a broad range of relevant data will help corporations swiftly pivot to keep up compliance. If a business doesn’t have a handle on its data and doesn’t have a method to efficiently communicate the impact of fixing rules, it has put itself in a potentially sticky compliance situation.
4. Stay up for emerging tech.
Because the industry evolves and the quantity of information collected continues to blow up, insurers will use artificial intelligence (AI) and machine learning (ML) much more to make informed decisions. Some leading-edge corporations are using ML algorithms to make faster underwriting decisions through ML’s ability to make sense of huge data sets and evaluate risk in minutes and even seconds. Also, AI and ML could automate the more commoditized underwriting and claims processing tasks, allowing experts to deal with more intricate situations requiring a human touch. A lot of these technologies have already been put in place within the insurance industry and beyond.
Blockchain is one other example of an emerging technology creating headlines due to its relationship to cryptocurrency. It’s an automatic and secure method to exchange data that, while in its infancy, may eventually blossom within the insurance market. Industry adoption is the most important challenge with any latest technology, but savvy carriers understand it’s prudent to remain on top of trends that would shape the long run.
IAT Insurance Group consistently evaluates current and future technology trends. With respect to our Programs business, we partner with MGAs to assist them turn into more nimble, adaptable, and successful. Contact IAT to start in your data-sharing journey.