The insurance industry, while a mature institution, is changing dramatically. Thanks to Big Data and the influx of business intelligence, insurers are able to leverage this information to learn more about their customers and improve risk assessment and valuations.
Insurance companies have traditionally grouped customers based on segmentation. These different groups reflected attributes such as age, gender, marital status and location. By grouping customers like this, insurers were able to establish pricing based on risk factors. Thanks to the business intelligence available now, insurers can develop better segmentation methods by analyzing data from many different sources.
This improved segmentation allows insurers to provide new products and services with greater customization and meet each customer’s unique needs. Instead of the traditional “one size fits all” model for each segment, insurers can now categorize their customers into smaller subgroups, more tailored to their characteristics and needs.
Risk assessment and insurance risk management
With a more accurate snapshot of the customers’ life journeys, insurance companies also have more information for accurate risk assessments. Insurers can assess risk based on actual customer behaviors and real events, rather than relying on characteristics of their predetermined segments. All of these tools have provided insurers the means of developing more accurate, specialized risk assessments and more personalized services.
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