Insurers Use Event Stream Data to Transform Services

Analyst Viewpoint

Streaming data is transforming how insurance companies provide their services. It can offer critical information needed to underwrite risks with better information, detect and prevent fraudulent claims, deliver world-class customer service and tie together disparate internal legacy systems. In the past most insurance processing systems had a transaction-oriented approach. Each interaction with a customer was a single transaction or interaction, like issuing a new policy or processing a claim. With the advent of streaming data, insurance companies have faster access to more information so they can assess customers more holistically as they evaluate risks and process claims against the policies insuring those risks. With streaming data, insurers can operate more efficiently, underwrite more accurately, prevent or reduce losses and offer new products and services.

Our research shows that nearly all financial services organizations (97%)—a category including insurance companies—consider it important to speed the flow of information and improve the responsiveness of the organization. Even just a few years ago, capturing and evaluating this information quickly was much more challenging, but with the advent of streaming data technologies that capture and process large volumes of data in real-time, organizations can quickly turn events into valuable business outcomes in the form of new products and services or revenue. Our research of a broad cross section of financial services organizations shows that more than half of those organizations (55%) are using their event streams to identify organizational or revenue-producing improvements. And nearly half (45%) are developing new products or services.

Nearly every insurer has employees that interact with customers. To provide the type of service today’s customers expect, these employees need immediate access to a 360-degree, up-to-date view of the entire relationship with the insured. Since many core insurance applications are based on legacy technologies that are not easily modified or integrated, streaming data can provide the glue that takes information from disparate systems such as underwriting, billing, and claims processing and combine it with new mobile applications and website activity without requiring any modification of the existing systems.

Policy holders have come to expect mobile applications for everything from bill payment to claims processing. With mobile applications, claims can be submitted electronically and they can include pictures where appropriate, such as images of damages for property and casualty claims or images of bills related to the claim. These applications have benefits for the insurer as well since they provide a rich source of streaming data. Using the event stream data collected from these applications insurers have a real-time and complete picture of every claim, from the initial processing through resolution. Incorporating this data can even reduce or eliminate the need for adjusters on certain claims. As applications communicate with each other it also provides a better experience with faster turnaround and lower costs due to less need for adjusters at each step in the process.

Insurers can also use streaming data to prevent or reduce losses. Location data from telematics or mobile applications can be used to identify risks related to natural disasters. For instance, if a hailstorm is predicted in a certain area, automobile policy holders can be warned to move their vehicles into their garages or reimbursed for sheltering them in a public parking garage. Some insurers are using smart home devices such as Wi-Fi thermostats connected to smoke alarms to alert policy holders via their phones when smoke or carbon monoxide is detected. If the homeowner is not at home, this could mean detecting and addressing a problem earlier and thus reducing the size of the claim.

Streaming data from sensors also enables insurers to transform the services they provide or offer new services. For example, auto insurers are using telematics that track usage and driving habits. This information is used to offer policies based on the number of miles driven, referred to as “pay as you drive.”. These insurers also use telematics to offer personalized rates, referred to as “pay how you drive.” Beyond auto insurance, there are even examples of dental insurers offering plans based on streaming data from smart toothbrushes.

Detecting fraud quickly and preventing it is another natural use case for streaming data. Real-time data is essential to preventing fraud rather than detecting it after-the-fact. Data from all systems must be collected and evaluated in real time to ensure that multiple transactions are not being executed simultaneously against different systems within the organization. Streaming data can also present a more complete picture of a claim to help prevent fraud. Comparing these streams of information using artificial intelligence (AI) can help identify claims that are potentially fraudulent.

Insurers have many opportunities to exploit real-time streaming data to transform their operations and improve their bottom line, and our research shows insurers are using event data to increase revenues and reduce costs. Some of these uses represent new products and services to enhance customers’ experiences, while others represent ways to access more timely and consolidated information from existing systems. In either event, to be competitive in today’s insurance market, your organization needs to embrace streaming data and the benefits it provides.