Data analysts often use the term “big data” to describe data sets that are too large to store and analyze with traditional methods such as relational database management systems (RDBMS). Big data is greatly affecting the operations of many businesses, including those in the insurance sector. Insurance data can be particularly challenging to use because it comes from many sources such as adjusters’ notes, fraud lists and claims databases.
The large number of claims that insurance companies receive means that adjusters often fail to review all the available information, which can result in a poor decision. The role of data analytics is becoming increasingly important in insurance for tasks such as identifying claims for closer inspection and prioritizing claims. Even a slight improvement in an insurance company’s loss ratio can mean a great improvement on the bottom line, especially for large insurers.
The following six areas show where big data is having the greatest impact on the insurance sector:
Settling claims quickly is one of the highest priorities for an insurance company. Most insurers have implemented fast-track processes for claims that have a low risk of being fraudulent. However, this process can result in an insurer paying for claims it shouldn’t. This …