The Irish insurance industry is ill prepared for the explosion of consumer information and risks being bypassed by new, more agile digital players according to a new report from the BearingPoint Institute. “Big data, or the collection and analysis of large volumes of information, will transform the sector but few insurance firms in Ireland or internationally are prepared for the change,” commented Martin McKenna, partner, BearingPoint in Ireland.
The report finds that 90% of insurance firms have yet to implement a company wide big data strategy. “Potential rivals and new entrants from other sectors such as telecommunications, retail and automotive are building their capabilities with the benefit of less legacy baggage and a set of market-disrupting data assets,” commented Martin McKenna. “Specifically in Ireland, the upcoming introduction of national postcodes will drive a host of added value service providers accelerating this trend and potentially challenging the existing players.”
The report states that insurers “are still at the big data starting blocks”. It says that the recent big data explosion has created a new ecosystem of data sources incorporating a diverse range of new players from telecommunications, retail and automotive companies, to domain-specific data providers and aggregators.
“As well as acting as valuable sources for insurers, such organisations are building their own capabilities with an aim to enter the insurance market, potentially with the benefits of less legacy baggage and a set of market disrupting data assets”.
The BearingPoint survey finds that while big data benefits are recognised by the insurance sector, activity on the ground lags behind ambition. Over two thirds of respondents said big data had a highly important role in the company’s future and 71% rated it as a maximum priority by 2018. However, less than a quarter (24%) said they felt their company’s maturity on the issue was advanced or leading and only 33% have started a departmental or company-wide implementation process.
When asked why big data was proving a challenge for insurance executives across Europe, a cyclic pattern emerged:
A smarter future: the five pillars of successful big data and smart analytics
However, Patrick Maeder, firm-wide leader of BearingPoint’s insurance sector and author of the study, says it is not too late for insurance companies to implement successful big data strategies: “We have seen a gap opening up between the leaders and the laggards in big data and advanced analytics in insurance, but the good news is it is not too late for the laggards to catch up.
“From our research and consulting experience, we have identified five core competencies for insurers to address in order to succeed in this area and break free from the vicious cycle restricting progress.“
The five pillars of big data:
To read more about how insurance companies can build capabilities to address the big data challenge, please download the BearingPoint Institute paper “The smart insurer: embedding big data in corporate strategy” which can be found at http://inst.be/004BDI
About the research
This article provides insights and shows trends in the domain of big data and advanced analytics in the insurance industry. It discusses the current state of practices in this area and considers the evidence for emerging best practice, building a picture of the facets insurers can adopt to remain competitive in a data-rich, smart future.
The findings of the article are based on a survey with respondents covering 30insurance companies in Europe and the US, undertaken between January and February 2014. The survey was conducted in close collaboration with TekPlus, a consultancy focused on providing solutions for business transformation and strategic direction with deep experience of the insurance industry and big data topics.
About the BearingPoint Institute
Founded in 2009, the BearingPoint Institute is an incisive, authoritative voice on business-critical topics, which brings together the finest minds from both within and outside the BearingPoint organisation. We strive to:
Advise business leaders to understand the evolution of the global economy at a deeper level
Explore new thinking, going beyond straightforward “Thought Leadership”
Propose new points of view about strategy and organisational change, and stimulate debate
This is achieved by offering practical, real-world advice from:
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Studies made by experts illustrated with real-life highlights
BearingPoint consultants understand that the world of business changes constantly and that the resulting complexities demand intelligent and adaptive solutions. Our clients, whether in commercial or financial industries or in government, experience real results when they work with us. We combine industry, operational and technology skills with relevant proprietary and other assets in order to tailor solutions for each client’s individual challenges. This adaptive approach is at the heart of our culture and has led to long-standing relationships with many of the world’s leading companies and organizations. Our global consulting network of 9200 people serves clients in more than 70 countries and engages with them for measurable results and long-lasting success.