"Today, your cell phone has more computer power than all of NASA back in 1969, when it placed two astronauts on the moon." So wrote famed futurist, Dr. Michio Kaku, in 2011 when thinking about how technology might further shape humanity’s future over the next 100 years.
Such is the current rate of technological growth that even those comments, just four years old, are now out of date – this year’s smartphones are up to eight times faster than those released in 2011.
Data and insurance
So where does insurance fit into this rapidly changing world? Insurance has not yet seen the same rate of transformation as some other industries, but that is beginning to change in two crucial ways.
Firstly, ‘big data’ has consequences for every business by enabling more evidence-based decisions, and most importantly, a better understanding of you, the customer.
Secondly, and more specifically to the insurance industry, bigger and better data improves the ability to understand risk – the likelihood that you are going to suffer a financial loss. Understanding risk properly allows insurers to do two things:
- provide information on how you can reduce your risk and minimise your losses, and;
- ensure that your premium price reflects your circumstances as accurately and fairly as possible.
The ABI's publication How data makes insurance work better for you (pdf 259 kB) looks at some of the exciting directions that the industry could potentially move in over the coming decade, as a result of the digital revolution.
Technology has a remarkable ability to capture the imagination of customers, exciting and engaging them. If insurers want to make the most of this ability, then they have to show leadership to innovatively use the data available to them, which can only happen if companies continue to treat that information appropriately and maintain a trusting relationship with their customers.
This publication is another step in that direction, demonstrating how your data will be used to your benefit, ultimately improving an industry which at its heart is about shielding you from ill effects, freeing you to focus on what’s important to you.