Insurance: the art of harnessing the power of data

The connectivity revolution

We are living in a world where everything and everyone are connected in an integrated global network. People, machines, natural resources, production lines, logistics networks, consumption habits and patterns, and practically all other aspects of economic and social life are or will be linked. This kind of all-embracing connectivity powers the fourth industrial revolution that is profoundly changing the way we are, the way we work and, above all, the way we relate to and interact with one another. 

“The speed of current breakthroughs has no historical precedent,” writes Klaus Schwab, the founder of the World Economic Forum. The Fourth industrial revolution “is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.” 

We can move from the reactive approach of claims payer to that of a proactive protector.

It is for this reason that the rise of digitization is one of the key issues in the current debate within the insurance industry. Connectivity, mobility and access to information have transformed all that we do, providing us with a unique opportunity to bring about a paradigm change in the way we conduct our business. We can move from the reactive approach of claims payer to that of a proactive protector, for both well-known and emerging risks in our customers’ physical and digital lives. In a nutshell, we have the opportunity to move from “loss and refund” to “prevent and protect”.

Fueling this opportunity is the by-product of the ever-expanding digital universe: data.

And that’s what I would like to focus on today.

Big data

According to some sources, 90% of the data available in the world today was created in the last two years alone. However, only a very marginal percentage of all data is ever analyzed and used. The data come from everywhere: purchase transactions, mobile phone signals, emails, social media posts, digital pictures and videos, smartphones, tablets, cars, houses, electrical appliances, call centers. On top, individuals and objects are increasingly connected. According to Gartner, the tech analyst, more than 20 billion connected devices and a quarter of billion connected cars will be on Earth by 2020. Data are not only more and more abundant, they are also increasingly shareable and exchanged. 

Big Data is transformed into predictive algorithms and programmed into automated systems to improve efficiency and reduce production and delivery costs.

Insurance companies are now processing big data with advanced analytics. Data are transformed into predictive algorithms and programmed into automated systems to improve efficiency, reduce costs (such as those connected with claims management) and offer more personalized solutions to clients.

Indeed, our business relies on our capacity to analyze time series in an effective way, looking to past events to formulate expectations about the future thereby estimating risk and establishing the correct value of a policy premium. Until a short while ago, we were limiting our expertise in mastering data management analytics almost exclusively to pricing and underwriting, but we have now fully realized that this mindset, coupled with our knowledge and competences, can be easily extended to other areas with a view to optimizing procedures and to providing customers with smarter and customized products delivered faster – just one click away.

Data management in Generali

In the Generali Group, big data management is progressing rapidly. While we have created the Analytics Solutions Centre to support Group companies in developing and embedding data analytics and data management into every step of the insurance value chain; our companies across our international footprint are setting up their own advanced analytics units to address the different business challenges.

We are relying on an ever greater range of innovative technology, widening our business outreach with new tools like Artificial Intelligence (AI), blockchain technology, robo-advisers and Internet of Things (IoT) platforms.

Thanks to these innovative technologies, we have optimized processes by automating many back office activities through AI; streamlined claims handling by implementing machine-learning-based fraud detection; and improved portfolio management by leveraging analytics to provide the right product to the right client.

And even more significantly we have emerged as a world leader in connected insurance. Generali boasts a platform of nearly 1.5 million connected cars worldwide and is a forerunner in Italy, Germany, France and Spain in the connected home sector. Also, it provides an innovative well-being program, Generali Vitality, now available to clients in several countries around Europe, and enables the evolution in the traditional insurance distribution through the Digital Agent, a system that allows salespeople to access sophisticated data analytics tools to connect with clients more easily and propose more relevant solutions. 

To know more about Generali-Progressive partnership, go to this page. To know more about Generali-Nest partnership, go to this page.

Last but not least, data analytics enable us to support The Human Safety Net, our flagship community outreach initiative, by matching demand and offer to facilitate entrepreneurial activities and start-up businesses among migrants.

Insurance: a long history of managing data

Well over a century ago, in 1881 to mark its 50th anniversary, Generali presented at a national agriculture and industry trade fair the outcome of a pioneering initiative it had pursued over the previous decades. Generali had been gathering and processing information on hailstorms and was thus in a position to provide an accurate study of hailstorm frequencies in the country. The data not only enabled the Company to design a more sophisticated hail insurance models but also to reduce significantly the traditionally high premiums in a country where agriculture accounted for 55% of the country’s economy. Further, it provided invaluable support to Italy’s new and expanding meteorological sector.

In 1881, Generali presented an accurate study of hailstorm frequencies in Italy, powered by data management

History showed that hail insurance, in a country that was still predominantly rural, proved to be a crucial development. And data gathering and processing was to be, then and now, a game-changer, changing the rules of the game and disrupting the industry.

Insurance companies have always been very good at managing data. Today, the wealth of available data and the technological advances are determining a quantum leap from ‘good’ to ‘excellent’. Today, we can gather and interpret a vast amount of data better than ever before and fully harness the power of the global network.