Big data in risk and claims management

The exponential growth of Big Data is changing not only the type of data used, but also the way in which this data is analyzed, claims management and customer relations.

The latest generation of software identifies and aggregates data to accurately determine the behaviors and needs of policyholders.

As a result, insurance companies today treat the entire policy management and underwriting chain in a very different way than in the past:

• for risk underwriting, pricing models and the valuation of claims reserves are now abandoned in favor of predictive actuarial methods. These methods identify risk profiles in real time through connected objects, in particular through the use of telematics,
• as far as claims management is concerned, the mass of data collected is dissected by a set of algorithms in order to determine as closely as possible the necessary reserves,
• intelligent analytics now assist insurance companies in creating products and developing pricing models based on actual customer behavior,
• policy and claims management is faster and more efficient,
• new risks can be quickly detected, allowing insurers to promptly adjust policy rates and terms and conditions,
• the company's resources are better utilized and can be efficiently invested in products with higher returns.

Telematics, cell phone applications, connected objects worn as bracelets or watches, for example, are the most commonly used means of collecting parameters in real time throughout the entire lifetime of policies.

Motor and health insurance are naturally conducive to studies carried out using the information collected. These studies can lead to rate adjustments or preventive measures for the benefit of policyholders.

In terms of portfolio selection, the new tools provide insurers with greater visibility to identify customers with the safest profiles and avoid those with a higher probability of claim. The best-equipped insurers therefore have the power to better select their portfolio, and thus preserving or improving their results.

Innovation designed for claims management features many advantages:

• it enables insurers to strengthen their ability to detect fraud but also to reduce claims costs, as automation is expected to reduce payroll expenses,
• it improves the insurer-insured relationship by introducing more transparency in claims management,
• it reduces the frequency and intensity of claims by improving prevention measures through the monitoring of policyholders' behavior.

Claims management is therefore greatly facilitated by artificial intelligence processes that:

• minimize fraud risk,
• automate claim evaluation,
• manage the payment of amounts due to the insured,
• reduce internal disaster management costs.

Finally, technological innovations bring more satisfaction to loyal customers, who have direct and transparent access to their files since:

• claims notification reports are simplified and can be made at any time,
• policyholders can follow the progress of their claims in real time,
• the procedures for reimbursement by insurers are faster.