A Data Explosion on the Open Road

Jason Verlen / Insurance, Telematics /

A growing telematics market means that insurance carriers are drowning in data. We could build an ark and hope to ride it out. But wouldn’t it be better if we could monetize this flood?

Insurance carriers wouldn’t be blamed for thinking that they’llsoon be less in the business of insurance and more in the business of data. In the last decade, the incredible evolution of the connected car — with telematics collection devices ranging from dongles to apps to the embedded technology that’s now in every new car — has changed the way the world thinks about transportation.

Estimates suggest that a single connected car will send up to 25GBs of data to the cloud every hour. Let that sink in for a minute; 25 GB of data is equivalent to 6000 music downloads or 1250 hours of browsing the Internet.

Traditional Data Management Approaches Won’t Be Enough to Manage the Crush

Insurers are painfully aware that current-state data collection and analysis is daunting, and trying to anticipate and stay ahead of technology is never-ending. Research of personal and commercial line insurers by Strategy Meets Action suggests carriers will increase their spend on analytics related investments by 10 percent, hoping to bolster their capabilities.(1) Major considerations for how to apply those investments should include:

  • Data Collection and Management: how to get it, where to keep it and how to access it.
  • Activation, ROI: how to leverage the data for a better customer experience and optimized underwriting, claims, and marketing opportunities.
  • Privacy, Security, Regulations: where the data comes from, ownership of the data, how to secure it and how it may be used.
  • Infrastructure and Personnel: deciding whether to build or partner to access the necessary systems and technologies, and aligning personnel and expertise to extrapolate the data to develop new insights and products to ensure a better customer experience.

At CCC, we hear from carriers that they are overwhelmed by these considerations and are challenged by what seems to be a fragmented provider landscape and telematics ecosystem. Big data is amazing and, sometimes, paralyzing.
But we also know that — for insurance carriers who get it right — the activation of connected car data is a huge business opportunity in the form of increased customer satisfaction and loyalty, and more opportunities for workflow continuity and transparency across their business.

Monetizing the Flood

The opportunity for insurers to monetize connected car data is tied to their ability to use it to solve or improve existing business challenges, including current operating models and silos, process inefficiencies, and cost containment strategies.
The other important component is an insurers’ ability to bring new, relevant products and services to consumers. Getting these right is critical if you want to take part in what McKinsey and Company estimates will be a $450B – $750B revenue pool from car data monetization by 2030.(2)

To get in on that action, we must first make the collective acknowledgement that auto insurance is transforming and today’s consumer is different – more sophisticated than ever before. More specifically:

  • Auto insurance transformation is being driven, in part, by a confluence of trends and factors, including rising claims severity – due in large part to rapid advancements in vehicle technology and materials – and, increasing accident frequency, driven by distracted driving, speed limits, and miles driven. These dynamics combine to cause pure premium (and repair costs) to continue to grow.
  • Today’s consumer lives in a world permeated by mobile technology, driving anytime, anywhere demands and unending desires for personalization. This has led to ‘liquid expectations,’ a phenomenon whereby consumers think every company they do business with should operate like Amazon and Google.

How do you get ahead of, or be part of the transformation while meeting demands for business performance and delivering an outstanding consumer experience? Here are some ideas.

Plug into a Platform with Scale and Security

Many platforms exist, but they aren’t created equally. Look for a platform that is highly scalable and can account for the large volume of data that will make it easy for you to activate telematics data within your existing workflow. An open platform should also provide a single integration point that naturally integrates data from various sources (the connected car, mobile and installed devices). It should facilitate efficient, actionable insight that will enable improved and accelerated decision-making.
With this big data comes big responsibility for keeping it secure. Central to data security is data integrity, privacy, and management. A platform that can support a multilayered data security strategy inclusive of prevention, detection, and policy/administration should be a big part of our consideration set as it is proven efficient and effective in protecting the data you manage.

Connect to a Dynamic Ecosystem, Connect to Data

The only way to compete in today’s environment is through partnerships. There are simply too many technologies, services, valuable data sets, and trading partners, to access and connecting to each individually doesn’t make financial sense. Plus, one-off connections create silos, trapping data that might otherwise be easily applied to improve the consumer experience, make better decisions, and streamline processes.
The platform or foundational technology you use to enact connected car data needs to help you connect to, and create, your own dynamic ecosystem. If a platform isn’t proven to perform this core capability, it’s not worth considering, because it only gets more complicated from here. And, by that I mean, connected car data can be powerful, but it’s power is amplified when it’s paired with data and insights that are useful to what you want to accomplish.

For example, does your organization want to move to a touchless first-notice-of-loss (FNOL) process? What kind of data do you need, and in what quantity, to make the necessary automated decisions to accomplish this to the degree of accuracy that makes eFNOL a reality? Does the platform you’re considering bring the requisite data and experience to bear?

What about executing on your usage-based insurance (UBI) strategy? Is the same platform – and the data available through it – effective in supporting your UBI programs? Does it collect a meaningful amount of connected car data – from the available collection methods? Is data scored and presented in a way that’s useful to the groups that can benefit from it most, including underwriting, marketing, and claims?

CCC is working with its customers on these and many other use cases for transforming auto insurance. With more than 180M claims worth of data in our warehouse, more than a billion connected car driving trips scored, and the industry’s largest automotive network, unified on a single, open platform, we have a unique vantage point to share.

Activate Data with Advanced Analytics and AI

It’s in the press constantly, but advanced analytics through machine learning, deep learning, and artificial intelligence (AI) are perhaps the single biggest developments to help insurers realize the full potential of connected car data. These technologies bring the necessary and unprecedented level of sophistication required to manage the tidal wave of data by mirroring human intelligence and the unique ability to learn from the data itself, performing more complex functions more quickly than a human ever could.

For example, CCC is using neural networks, an application of AI, to detect vehicle damage using pictures taken from a mobile phone. The data from the picture is processed against hundreds of millions of vehicle-claims records and damage data contained in CCC’s data warehouse, accurately determining the damage of a vehicle and speeding the claims and repair process significantly.

Benefits
In the short term, it is the access and activation of data that
1) helps the insurance company pay for a good quality repair to get a customer back on the road;
2) helps the collision repairer get to work faster, speeding cycle time and improving the policyholder experience; and
3) allows the insurer to open new lines of communication with their policyholder on an ongoing basis, delivering better, more relevant services.

Longer term, it means taking down silos and working horizontally across an enterprise. Today, most insurance companies have strong divisions between auto and home, and between marketing, underwriting, and claims. But the most forward-thinking insurers are imagining how to use a data set to connect all of these silos.

History is littered with companies that did not transform quickly enough. In nearly every industry, tomorrow’s leaders are the companies that are prepared to move radically faster than they ever have before.

(1) Strategy Meets Action, “Data and Analytics in Insurance: P&C View Through 2020” report; Digital Insurance, “Insurers Plan to Spend More on Analytics, BI”, July 12, 2017.
(2) McKinsey&Company, “Monetizing Car Data – New Service Business Opportunities to Create New Customer Benefits”, Sept. 2016.