How is Big Data transforming the insurance industry?

How is Big Data changing the insurance industry?

The basic principle of the insurance industry is risk. Customers pay for policies based on their personal assessment of something happening to them, whether that means getting a serious disease, being involved in a car accident or their house burning down, in order to receive compensation for such an event, which will help to mitigate the financial impact of the event. Insurance companies offer coverage for the event based on rate factors developed from actual events in the past. The rates consider the probability of such an event and the total value needed to pay out for the final cost of an event.

It would stand to benefit both the risk taker and those doing the risk mitigation to be able to more acutely understand and predict—and therefore price—these possible risks. In the age of Big Data, it is becoming more and more possible to improve the analysis. Predictive, statistical modeling is being used by insurance companies to work out what will likely happen down the line by measuring and understanding as much as possible from what has occurred in the past. Models are then built to show the possible financial impact of various situations.

The insurance industry is one that has been very keen to adopt Big Data into its regular practices, examining all possible collected information from the past. One of the important uses is to narrow policy premiums to precise events. Precision of the risk review can lead to a wider array of products to precisely match the expected event to be hedged against what could be a large financial event the customer wants to build financial protection against.

Using Big Data allows e2Value, the leading provider of web-based property valuation solutions, to assist customers with all of their Insurance-to-Value (ITV) and collateral value monitoring needs. Whether looking for valuations for high-value homes, mainstreet homes, condos, co-ops, commercial properties, manufactured homes, log cabins, or farms and ranches, our patented estimator can quickly calculate the cost of replacing a residential, commercial or farm structure, and provide a fast, cost-effective and accurate replacement cost valuation.