Advancements in technologies, bigger data sets and analytics have changed the game for the insurance industry. But businesses continue to face new data privacy obligations and stricter requirements in processing consumer data.
In an exclusive interaction with CXOToday, Shivakumar Shankar, Managing Director-India at LexisNexis Risk Solutions, explains some of the current data challenges in the insurance industry. He also tells us how the company helps insurers make informed decision through technologies and smarten up their data privacy policies.
CXOToday: Could you explain the state of data privacy in India and highlight the data challenges in the insurance industry?
Shivakumar Shankar: In India, data protection and privacy are regulated under the Information Technology Act and reasonable security practice rules. There is no specific data protection authority in India at the moment. The government has also introduced India’s first-ever Personal Data Protection Bill. It is yet to be approved by the Indian Parliament. Consumers in India are concerned about sharing their personal data as they believe the data could be compromised as well as used for marketing or promotional purposes. However, there is a growing awareness in the corporate world that data breach can expose companies to disregard, devaluation, loss of confidence and legal claims.
Like anywhere in the world, the insurance companies in India are sitting on a pile of data but they are not able to use it to a maximum capacity. Not all data has been digitized due to limitations, legacy systems and lack of future proofing. Even the digitized data may not be integrated with each other to give single customer view. There should be a system towards sharing information within the procedures of privacy norms. The benefit of sharing data is huge within the insurance industry and a lot can be accomplished.
Several insurance companies have started implementing big data approach only for their marketing/sales campaign. There is a scope for faster and efficient decisions based on big data not just in customer facing functions like sales or claims servicing but across the insurance continuum like product development, pricing, risk assessment, fraud management and compliance. It’s time insurance companies become smarter about data privacy.
CXOToday: What is the role of data and analytics in insurance fraud detection?
Shivakumar Shankar: Insurance industry has a lot of data available with them which can help to mitigate fraud management. This data is also significant for various preventive measures like risk assessment at underwriting. Holistic database can be used to identify fraudsters and reduce the turnaround time in policy issuance and claims.
Data on the other hand can help insurers draw intelligence to generate the best results and service the customers better. With the help of data, insurers can also identify the pattern of the customers who are constantly mixing policies. Data can also help to develop new insurance products, predict and prevent risks, understanding customer behavior, streamlining the claim process, improving underwriting, and preventing fraud.
CXOToday: What are some of the disruptive technologies impacting the insurance sector in India?
Shivakumar Shankar: Many insurers are using Artificial Intelligence (AI) and algorithms are used to sort claims, analyze aberrations in data patterns and single out false claims. The application of AI in insurance also improves in customer experience, product innovation and fraud detection.
Adoption of big data in India is still at a very nascent stage. Globally, big data is a boon for the insurance industry as it results in optimum access to insurance services, saving cost and providing high fraud detection. Big data for insurers also provides to understand consumer actions and gather real-time information.
Telematics is also helping insurers to increase their interaction and proximity with customers and helps in the understanding of risks and customer behavior from the collected data. Utilization of telematics helps in understating the driver’s past driving history, its imperatives, preferences and the usage of the car. Telematics in auto insurance can help insurers in the areas of claims management and underwriting. There is a long way to go for the Indian insurance industry to go in terms of adopting telematics.
CXOToday: What is the role of LexisNexis Risk Solutions in the insurance industry?
Shivakumar Shankar: We are a global data analytics, technology and risk solutions firm headquartered in the U.S. and one of our areas of expertise is insurance from our work with 95 of the top 100 insurers. Our core is to provide data and technology services, analytics, predictive insights, and fraud prevention for insurance sector. LexisNexis Risk Solutions help insurance companies to take informed decision at early policy life cycle stage. We also undertake fraud analytics to identify monitor and mitigate risks once identified.
CXOToday: What could you tell us about the company’s latest and upcoming technology innovations.
Shivakumar Shankar: Globally, we have created the first purpose-driven Advanced Driver Assistance Systems (ADAS) and vehicle safety classification system for auto insurance pricing and claims analysis. We recently introduced the LexisNexis Recall Clarity, a solution that assists auto manufacturers in the owner identification process for safety-related recalls. In India, we are creating a foundation by helping insurers for a holistic database. We are also currently involved to on-board few insurers providing them fraud repository.