By Susan Muldowney | Vol: 41 Issue: 3 | Oct 2018
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In less than a decade, the amount of data stored around the world is expected to reach 163 zettabytes. 

To put this into perspective, US-based data storage company Seagate Technology estimates it will be equal to watching the entire Netflix catalogue 489 million times. Widely regarded as the ‘new currency’ due to the wealth of insights it can reveal, data is fuelling the digital transformation of industries such as insurance, and those that embrace its potential look set to be market winners. 

Data science broadly refers to the processes, algorithms and systems used to extract knowledge and insights from data. 

These include transformative technologies such as artificial intelligence (AI) and machine learning (see panel), as well as the predictive analytics of big data. As insurers seek to improve their outcomes in competitive and changing markets, they are increasingly drawing on data science to cross-sell products, improve customer experiences and engagement, and identify risk and reduce fraud. 


Simon O’Dell, CEO and co-founder of Insurtech Australia, says that while traditional insurers are venturing into data science, insurtech start-ups are largely responsible for bringing these capabilities to the market. 

“There are different models that the incumbent players are deploying to realise data science and data strategies,” he says. “Some are looking to develop data science capability in-house, but the most common model is to partner with insurtechs.” 

Australian start-up Codafication is one company helping insurers to make better sense of their data. Its technology extracts data from various sources, such as existing legacy systems, and transforms it for various branches of AI, including machine learning. 

“When you’re an incumbent insurer, you may have amassed a lifetime of software systems through various evolutions of technology,” explains Daniel Sandaver,Managing Director of Codafication.

“We connect those systems into one layer so that insurers can better know their customer at the time of a claim.” 

Daniel believes partnerships with insurtechs are helping traditional insurers remain relevant. “Insurers are facing a seismic shift in the industry where new challenger companies are starting with fresh systems built on modern technology, as well as disruptive companies that are a hybrid technology-insurance company,” he says. 

“Incumbents know they have to move fast while maintaining their compliance with the law and that’s why we’re seeing more strategic partnerships with companies that can solve some of their problems.” 

Jan-Philipp Kruip, CEO and co-founder of FitSense, which enables health and life insurers to personalise products and services for customers by analysing data computed from wearable technology, says it has taken time for insurers to see the value of such partnerships. 

“I think every insurer has understood by now that if they do not change, they will not be around in 10 years,” he says. “There was some very steep learning over the past two years and most insurers are now at a point where they have the capacity to work with external parties, but I also think very few insurers have yet formulated a cohesive strategy of where they want to be in, say, three to five years and how exactly they want to execute that.” 


Some insurers, however, are ahead of the game. UK-based insurer Cuvva, for example, is breaking the mould of car insurance by allowing infrequent drivers to purchase an hour of coverage via their smartphone when they need it. US-based start-up Lemonade is also using technology to simplify the insurance process for customers who expect swift, seamless digital interactions. 

It uses machine learning to allow consumers to buy customised property and casualty insurance directly through their smartphones. Closer to home, IAG in New Zealand is using telematics data to transform its vehicle insurance. Telematics describes a method of monitoring an asset, such as cars, via GPS and on-board diagnostics. 

Ian Taylor, National Manager Commercial Motor for IAG New Zealand, explains that the use of telematics is designed to keep drivers safer on the road. 

“NZI’s [part of IAG] Safe Driving Rewards program supports transport operators and their drivers by incentivising them to be in the safest 25 per cent of companies that use EROAD in New Zealand, and then waiving the excess should an accident occur in a heavy motor vehicle,” he says. 

The program, which was named Innovation of the Year at the 2016 ANZIIF New Zealand Insurance Industry Awards, uses telemetric data from the EROAD GPS system installed in trucks to collect road user charges in order to identify the safest drivers, ranking factors such as harsh braking, rapid acceleration and speeding events. 

Meanwhile, in Hong Kong, AXA is simplifying insurance through its MyAXA mobile application, which allows customers to manage their policies by submitting claims online or searching for doctors through GPS functionality.

MyAXA also features a first-in-market e-prescription service, which enables customers to order their medicine with just a photo of their prescription. 

In March this year, Andrea Wong, AXA Hong Kong’s Chief Marketing and Customer Officer, told Gigabit Magazine that – as new digital entrants have shaken up the industry by simplifying the insurance process – AXA has focused its attention on what its customers really want. 

“Traditionally, insurance has not led in the digital space, but it is catching up quickly with other industries. At AXA, we are investing heavily in infrastructure, people and tools to transform the customer experience and modernise insurance on all fronts.” 


Stefan Mohr, Senior Partner and Managing Director of Boston Consulting Group in Sydney, believes data science will revolutionise every step in the insurance value chain. “It will allow insurers to be much more tailored in their approach,” he says. 

“For example, if customers give access to their location data and they are in the ski fields, insurers can send them alerts and ask if they want to take out travel insurance for their ski holiday.” Stefan adds that data can also be used to foster engagement with customers. 

He cites Qantas Assure, which rewards its health customers with frequent flyer points when they engage in physical activity. 

Insurtech Australia adds that a deeper level of engagement also provides opportunities for dynamic pricing and underwriting by calculating more accurate risk assessments over time. 

“It allows [pricing] to move in alignment with the fluctuation of the risk exposure,” Simon says. “Rather than just measuring risk at the beginning of insurance coverage, data allows pricing of risk to move in alignment with the fluctuations of the risk exposure.

Data will also enhance opportunities for cross-selling, according to Stefan. “There are some very novel propositions, but less so in Australia at the moment. I have seen examples overseas where customers can take out car insurance and, if you go away on holiday, you can switch it to a travel insurance product and your car insurance rests over that time,” he says. 


Research from Accenture shows that most insurers’ growth strategy hinges on customer acquisition and retention, as well as their potential for increased cross- and up-selling. 

Simon says data science can enhance this by re positioning insurers as partners in risk prevention. 

“Insurers are always looking for new touchpoints with customers to enhance retention and cross-selling opportunities,” he says. “I think there’s a fundamental shift whereby insurers are moving into risk prevention by using digital communication streams to help protect customers through things such as weather alerts.” 

By helping customers prevent risk, Stefan says insurance will be seen as less of a ‘grudge purchase’. “Insurance typically is a low-engagement category,” he says. 

“You buy it and you forget about it until you have a claim. But rather than just insuring against risk, data allows insurers to predict and prevent. This could involve putting sensors in a house to detect water leakage and then sending a plumber over to stop it so the water damage is limited.” Billy Miller, IAG New Zealand’s Director Data and Analytics, says data science is transforming the company’s business model from ‘insurance’ to ‘assurance’. 

“For IAG, the power of data and analytics will help enable our purpose of making the world a safer place,” he says. “By joining up our own data with external sources of data in a safe and secure way, we’re able to gain unique insights into the needs and desires of our customers. 

“For example, over the past 12 months, we have been able to join up weather data, geospatial data and property data to build models that allow us to respond rapidly to significant claims events. The capabilities we’re developing will not only give us greater insights into what our customers need, but the real-time decision-making will also ensure that every experience is fast and smooth.”

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