innovation and big data in insurance
TRANSCRIPT
Big Data an actuarial perspective
Decavi-KPMG, 18/11/2015
Mateusz Maj Chairman of IABE
Big Data WG [email protected]
What is Big Data?
Internet of Things
What is Big Data?
What is Big Data?
What is Big Data?
source: www. hp.com
Why Big Data Working Group?
Discuss: • Impact of Big Data on insurance sector and the actuarial
profession;
• Present challenges and good practices when working with Big
Data;
• Educate actuarial profession about Big Data through CPD
courses
Insurance value chain: undewriting Covers different
Underwriting
360 degree customer view
Combine different sources and apply analytics to
create comprehensive customer view and: • Maximize profitability of the current portfolio • Detect cross-sell and up-sell opportunities;
• Increase customer satisfaction and loyalty;
• Acquire new profitable customers and reduce marketing costs.
Underwriting
Underwriting Tesco group – UK
Motor – 1M Pet – 0.45M Travel - 0.175M Life – 0.175M Home – 0.4M
• Insurance prevention program with discounts and rewards for good
driving
• ‘Phased’ approach: • Phase 1: combine data from different sources i.e. traditional channels, online channels,
external service providers, Tesco group warehouses;
• Phase 2: Identify the right customers within Tesco network;
• Phase 3: Provide initial offer and reward drivers with initial rewards from Tesco group;
• Phase 4: Iterate and provide personalized insurance offers.
Underwriting making insurance sexy
Pricing
Pricing Rating trends
1980s Now
Profession
Engine power
Coverage
Bonus-malus
Coverage
Bonus-malus
Claims history
Traffic violation
history
Age of vehicle
Use of vehicle
Make of vehicle
Purchase price
Parking place
Occupation
No. of drivers
Age of drivers
Maritial status
Real estate
Driving license
Mileage
Registered owner
Credit rating
…
Do we need additional factors? Is telematics necessary?
Univariate
basis
Risk
modelling
Technical
premium
modelling
Scenario
testing
Price
optimisation
Extra data
sources
Telematics
data?
Pricing Rating trends
• New rating factors;
• Flexible, dynamic risk pricing;
• New modelling techniques like machine learning;
• New, disruptive insurance offerings like Usage-
Based Insurance.
Pricing
Pricing Usage-Based Insurance (UBI)
UBI is the scheme where insurance premiums are
calculated based on dynamic causal data, including
actual usage and riskier driving behavior.
Pricing Usage-Based Insurance (UBI)
Full UBI – niche market segments
Motor insurance telema7cs – mass market
Works well with niche segments: • Young drivers • People living in risky regions • Low-‐mileage drivers
Insure the Box, UK New disrup=ve model for low-‐mileage drivers with prepaid miles (similar to prepaid mobile. No punishment for bad driving. Self-‐selec=on + individualized premiums.
Progressive, US “Prince of pricing” with MyRate (pricing variable innova=on) & Snapshot (1st telema=cs-‐based insurance) offers Self selec=on & individualized insurance premiums
Intesa SanPaulo Assicura, IT Telema=cs play key posi=on – car, bike home Created viable risk-‐based pricing model with phased approach for Viaggia con me: Phase 1 (tradi=onal variables), Phase 2 (Banking parameters), Phase 3 (Purchase and use variables), Phase 4 (Behaviour variables)
Insurance value chain: undewriting Covers different
Claims management & Fraud detection
Insurers loose 5% of the annual revenue due to fraud
Coalition Against Insurance Fraud (US) in the 2014 report has
stresses that technology & Big Data plays a growing role in
fighting fraud
Claims management Examples - UBI
From high to low loss ratios
UnipolSai -‐ IT CoverBox & Carrot -‐ UK Telema=cs champion (2.2M ac=ve boxes) Best prac=ce claims management incl.: • FNOL -‐ quick accident response • Vehicle loca=on in case of of theW • Accident reconstruc=on
Further improvement of the operational efficiency including: • Crash data combined with video footage to fight
fraud • Better prediction methods to reduce claims duration
and cost i.e. no need for expert, efficient accident reconstruction
• Prove innocence
Covers different
Legislation
EU-wide law under construction
Insurance Can it be sexy?
Health insurance, US Oscar is a health insurance company that employs technology, design,
and data to humanize health care.
Technology as differentiator (telemedicine) - system connects doctors and
patients with help of mobile app, website, bills, free fitness-tracking devices – easy
to use and understand.
Insurance Can it be sexy?
Home Insurance, IT Habit@t is the first Connected Home Insurance by Cardiff;
Well targeted customers – young, tech-savvy, from big towns;
IoT based - combining home telematics with home insurance;
Superior customer relationship - user-friendly & seamless usage via
smartphone app, multichannel with strong support;
Proactive alerts and risk managements.
EU-wide law under construction
Role of actuaries
Data scientists
