# AI-driven insights can re-energise the insurance sector
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2018-03-27
Category: INSURANCE
Category URL: https://financedigest.com/category/insurance
Meta Title: Insurance Industry Challenges: Embracing Data Analytics and
Meta Description: Discover how the rise of fintech and advanced data analytics is reshaping the insurance sector. Stay ahead of the competition!
URL: https://financedigest.com/ai-driven-insights-can-re-energise-the-insurance-sectorhtml

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The insurance industry has come under real pressure over the past decade or so. The fintech revolution has meant that smaller and more agile startups are able to offer a variety of new services to consumers and businesses. These services are not only more interactive and based on the latest technologies, but they are also services that bigger insurance firms cannot easily offer.

This increased [competition from newer market](https://www.financedigest.com/paper-recycling-market-competitive-growth-strategies-based-on-type-applications-end-user-and-region.html "Paper Recycling Market Competitive Growth Strategies Based on Type, Applications, End User and Region") entrants is a growing problem for more established insurance providers. But with more [data available to insurance](https://www.financedigest.com/how-data-is-revolutionising-car-insurance.html "How data is revolutionising car insurance") firms than ever before, there is an opportunity to embrace the technological changes that are taking place. While their size makes it harder to drive technological advances themselves, [insurers](https://www.financedigest.com/different-countries-different-insurance-cultures-how-insurers-can-adapt-their-products.html "insurers") are increasingly collaborating with startups and are well positioned to make the most of the data they hold.

**Insurers, CRM and data**

![Dorian Selz](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/dorian-selz-450x641-1736842893402-compressed.jpg)

Dorian Selz

A recent Economist article [stated that the ‘world’s most valuable resource is no longer oil](https://www.financedigest.com/eu-considers-more-funds-for-eastern-states-in-bid-for-deal-on-russia-oil-ban.html "EU considers more funds for eastern states in bid for deal on Russia oil ban"), but data’. This is certainly something that could ring true for insurance providers. [Insurance is an industry that has always been awash with data, and as consumers and businesses increasingly manage their insurance online](https://www.financedigest.com/improving-online-visibility-for-insurers.html "IMPROVING ONLINE VISIBILITY FOR INSURERS"), the sheer volume and breadth of that data is only going to increase. This is why so many [insurers have invested](https://www.financedigest.com/classic-car-insurance-broker-launches-future-classic-investment-guide.html "Classic car insurance broker launches Future Classic investment guide") in Customer Relationship Management (CRM) systems.

The data available on [insurance customers is rich in insight, insight that if deployed correctly would allow insurance firms to really understand the needs](https://www.financedigest.com/breaking-down-the-types-of-insurance-you-need.html "Breaking Down the Types of Insurance You Need") of those customers and address any issues before they arise. But even when deploying CRM, the industry has traditionally struggled to really monetise this asset, [held back](https://www.financedigest.com/burberry-held-back-by-china-lockdowns-and-u-s-weakness.html "Burberry held back by China lockdowns and U.S. weakness") by a combination of regulatory concerns, a lack of technological know-how and a reluctance to adopt a business model that truly reflects the value of data.

Now that technology has evolved to help [insurers with data analytics](https://www.financedigest.com/predictive-analytics-a-new-way-of-insuring-success.html "Predictive analytics: a new way of insuring success"), so the value of data has increased exponentially. Some insurers have in fact got to grips with structured data – data that comes in a format and file type that is easily stored, managed and accessed by CRM systems– but the reality now is that the most insightful data available to insurers is now unstructured, such as social posts, emails, web pages and call centre transcripts.

**Do** [insurers really know their customers?](https://www.financedigest.com/customer-engagement-in-the-insurance-sector.html "Customer engagement in the insurance sector")

Unstructured data is potentially enormously revealing to insurers, yet most CRM [systems are not capable of storing and managing](https://www.financedigest.com/energy-management-system-market-to-register-a-cagr-of-14-8.html "Energy Management System Market to register a CAGR of 14.8%") unstructured data. It comes in such a wide variety of formats and even the [world’s biggest CRM firm Salesforce has estimated that only 1% of a company’s data](https://www.financedigest.com/u-s-yield-curve-inverts-after-strong-jobs-data-world-shares-mixed.html "U.S. yield curve inverts after strong jobs data; world shares mixed") is used by its CRM system.

Another issue is that [insurers store their customer data](https://www.financedigest.com/the-data-driven-future-of-the-insurance-industry.html "The data-driven future of the insurance industry") in a multitude of different enterprise systems. It is not uncommon for an insurer – whether offering retail, corporate or reinsurance services – to have two different structured databases (one for pricing and one for contracts) in addition to other [systems to store customer data](https://www.financedigest.com/interoperability-of-data-to-accelerate-the-ventilator-test-systems-market.html "Interoperability of data to accelerate the Ventilator Test Systems Market").

This means that even finding customer [data can be a challenge](https://www.financedigest.com/meeting-the-data-challenge-in-financial-services.html "Meeting the data challenge in financial services"), before insurers can even think about extracting actionable insight from it. With no 360-degree view of customers and a real inability to search data in a multi-org environment, there is a widespread lack of customer understanding which can have a significant impact on customer churn, as well as lead [generation](https://www.financedigest.com/arora-project-have-experienced-out-of-this-world-returns-with-their-lead-generation.html "Arora Project have experienced out-of-this-world returns with their lead generation") and lead prioritisation.

**Deploying AI to mine unstructured data**

Any [insurer seeking to get maximum value from its data should be developing and shaping their business](https://www.financedigest.com/business-insurance-what-does-it-cover.html "Business Insurance: What does it cover?") to put data at the core. This is not a small undertaking, but given the economic potential of data, a step that should be on the agenda for all business leaders within insurance.

A good place to start when addressing the unstructured data that holds so much insight for insurers, is in utilising [artificial intelligence](https://www.financedigest.com/how-artificial-intelligence-is-simplifying-sanctions-screening-for-insurers.html "How Artificial Intelligence is Simplifying Sanctions Screening for Insurers") (AI). AI uses advanced machine-learning algorithms to create an analytic power far greater than anything used previously, meaning it can extract great insight from data.

Some insurers have certainly [made progress](https://www.financedigest.com/sweden-finland-and-turkey-have-made-progress-on-nato-membership-sweden-says.html "Sweden, Finland and Turkey have made progress on NATO membership, Sweden says") when deploying AI and machine learning to their structured data, and extending that to unstructured data could help established insurers ward off the threat from insurance-based startups, and transform the industry in the process.

**Improved underwriting** – underwriting is a costly process, that often involves invasive questions and is seen as laborious and time-consuming. AI can [automate the entire process](https://www.financedigest.com/the-implantable-biomaterials-market-to-move-ahead-on-rpa-robotic-process-automation.html "The Implantable Biomaterials Market to move ahead on RPA (Robotic Process Automation)"), scanning unstructured data to gather the required information and identify patterns and trends. AI can analyse submissions to identify risk information far more effectively and accurately than humans, starting the underwriting process and providing [protection to insurers](https://www.financedigest.com/how-to-choose-the-best-income-protection-insurance.html "How to Choose the Best Income Protection Insurance") from potentially high-risk customers.

**Deeper insight for better service** – a key use of AI is to understand customers much more comprehensively. Not only can AI [manage unstructured data but it can also work in a multi-org environment](https://www.financedigest.com/how-to-manage-identity-in-a-hybrid-cloud-environment.html "How to manage identity in a hybrid cloud environment"), capturing data stored in different and disparate enterprise systems. This means that [customer issues can be identified in advance](https://www.financedigest.com/the-advanced-wound-management-technologies-market-to-grow-based-on-customized-digitization.html "The Advanced Wound Management Technologies Market to grow based on customized digitization") and makes cross-selling and up-selling an easier task. Service is improved, churn is reduced, and customer retention is increased.

**More efficient claims –** the [way in which claims are filedhasn’t changed](https://www.financedigest.com/three-ways-that-2022-is-going-to-change-how-you-think-about-money.html "Three ways that 2022 is going to change how you think about money") significantly for decades and is an area of insurance ripe for updating. A typical claim would involve interactions with a number of employees at the insurer, yet AI [automation can make the process](https://www.financedigest.com/the-aquaculture-feed-and-pharmaceutical-market-to-move-ahead-on-rpa-robotic-process-automation.html "The Aquaculture Feed And Pharmaceutical Market to move ahead on RPA (Robotic Process Automation)") much quicker and more efficient. Using AI to assess the reported claim, capture and damage new claims and interact with the customer has enormous [potential in delivering](https://www.financedigest.com/delivering-on-the-potential-of-open-finance.html "Delivering on the potential of open finance") a better experience for the customer. Dashboards offer direct access to claims related [information which is stored in multiple sources and systems](https://www.financedigest.com/the-cardiovascular-information-systems-market-is-expected-to-grow-on-a-persistent-note-in-the-future.html "The Cardiovascular Information Systems Market is expected to grow on a persistent note in the future").

Insurance is an industry that has rarely been at the forefront of [innovative technology](https://www.financedigest.com/cloud-professional-services-market-to-be-driven-by-technological-innovation-tmr.html "Cloud Professional Services Market to be Driven by Technological Innovation | TMR") but now has a rare opportunity to make use of the unstructured data at its disposal. Doing so will help insurers deliver an unparalleled customer experience and cement their [market position](https://www.financedigest.com/dynamic-positioning-system-market-notable-developments-geographical-outlook.html "Dynamic Positioning System Market: Notable Developments & Geographical Outlook").

By Dorian Selz, CEO, [Squirro](https://www.squirro.com/) and Konrad Niggli, Partner, [Synpulse](https://www.synpulse.com/en)


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