Years of low interest rates and increasing catastrophic losses, driven by changing weather patterns and the increasing growth of properties in areas prone to natural disasters—be it wildfires, hurricanes, or floods—have led to a decrease in underwriting profitability, culminating in a hard insurance market. Insurers are increasingly looking to bolster underwriting performance to take a larger share of the profitable market.
Amid this changing market, there is potential for a widely available resource—legacy data—to unlock new opportunities.
In this post, we’ll explore the data challenges that insurers are currently facing, and how legacy data sets can be leveraged and augmented with relevant third-party data sets to create new opportunities, revenue streams, and a differentiation factor.
Understanding the Potential of Historical Data
Over the past few months, we’ve seen a trend around the need to access legacy data, either via an abstraction layer or direct integration. This approach allows insurers to integrate legacy and historical data with new, digital-first data and move it to the cloud, leveraging the capabilities and scale that a cloud-hosted solution natively brings.
When insurers unlock historical data stored in legacy systems, there is proven potential to increase efficiency, reduce costs, improve risk management, and transform the consumer experience. This can also help mature insurers’ predictive models, as they are able to train their models using historical data in addition to new data.
A Real-World Example of Creating a Data Hub
So, how can insurers better leverage legacy data and empower underwriting? For one life and health insurer, creating a data hub helped to establish a single data viewpoint across their organization.
With 10+ legacy data systems, the insurer was struggling to provide information and services to the brokers in its ecosystem. Low data quality and misaligned master data management led to losing potential cross-sell and upsell opportunities.
To realize the benefits of the newer digital front ends and experiences the insurer had implemented, as well as capture all the relevant data, they needed a “golden record”—a single view of business entities with a cohesive data interface.
Endava helped the insurer unify their data across the business, with the use of advanced ontologies and algorithms, creating a unique broker view— “a golden record” of brokers. The data hub served as a trusted source, while also fueling the creation and deployment of front office applications to support brokers and back-office systems. And as we note in our latest eBook, in a digital world where data is king, getting the data architecture wrong can be an expensive mistake.
Realizing the Benefits of Legacy Data Sets
Data can be overwhelming across a large organization, but there is clear value in eliminating silos. Whether migrating data or creating a new data hub or accessing it via an abstraction layer as is, there are many effective ways for insurers to unlock revenue streams using legacy data.
For more information on how to become a data-driven insurer and other trends driving innovation in the insurance industry, download Endava’s Data-Driven Insurance eBook.