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Big Data and the Changes to Our Industry
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Speaker Introduction
John Roberts, Managing Partner │ DHG InsuranceJohn Roberts serves as the Managing Partner of DHG Insurance. He has morethan 20 years of public accounting experience focused on the insuranceindustry. Serving Fortune 500 companies, mutual carriers and privately heldinsurers, John focuses on audit and advisory services for the insurance industry.His experience with technical research, practical working knowledge of statutoryaccounting and his hands-on experience with transactional support affords hisclients with tactical and practical solutions to the challenges faced by insurerstoday.
Matt Howell, Senior Manager │ DHG InsuranceMatt is a Senior Manager in the firm’s High Point, North Carolina office and hasworked exclusively within DHG Insurance since starting his career in 2007. Hisprimary focus is providing traditional attest services operating in the property &casualty, life and health and warranty markets. These attest services include theplanning, execution, and delivery of risk-based audits to numerous insurancecompanies and insurance groups. His insurance experience includes statutoryaudits and examinations, GAAP audits, and quarterly/annual filings with theNational Association of Insurance Commissioners’ (NAIC) and state regulatoryagencies.
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Just the Facts
“Every two days now we create as much information as we did from the dawn of civilization up until 2003.”
Eric Schmidt
Chairman, Google
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Simple Definition
Data - Any information that can be measured, captured, or visualized about an activity or decision that is happening to, around or within an organization or an individuals life.
Quantitative – Numbers, surveys, log files or sensor data
Qualitative – Texts, videos or pictures
Satisfactionratings
Dailyaccountlogins
Opinionpolls
Picturesofdamagetoastructure
Redlightcamera
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Data Overload
Every MINUTE of Every Day sees:• 100,000 tweets sent• 3600 new Instagram posts• 200,000 e-mails delivered• 47,000 apps downloaded
And this is just a fraction of what we produce…..each of us leaves behind:
GPS Signals, social media updates, geolocation check-ins, digital photos and videos, our purchasing history, our browsing history, our mouse cursor movements, our search engine history, our cell phone records, our medical records, our banking records and our taxes.
We constantly produce data!!
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What to do with all this data?
1. Ask the right questions and seek the right insights
2. Obtaining all data may feel good but it can be expensive, time consuming, overwhelming and keep you from finding the useful information
3. Take some steps, quantify what is available to you currently and begin identifying the gaps and incremental information that you would like to capture
This is no small task and will require obtaining new skill sets to help achieve the above goals.
The ultimate goal is to strategically apply data principles to unleashnew insights, identify opportunities in the marketplace, increaseefficiency, create a strategic advantage, reduce risk and improveprofit, and empower talent.
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How ready are you for the change?
Sometimes being open to what the data is telling us isdifficult. Our preconceived notions and desire to be right inour beliefs often can’t be trusted. Consider this quote:
“If I’d asked people what they wanted, they would have said a faster horse.”
Henry Ford – Visionary
We must look for patterns in the data and try to understand what they are telling us.
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Data Scientist
As described by Forbes:
• The hottest gig for 2022• Billions of new devices create
and share information thus creating this need
• Savvy mathematician• Product-development guru• Unrelenting detective
Often identifies the trends (late deliveries) the frequency (on Thursday) and the culprit (downtown packed for college night)
Led by MASTER ORCHESTRATORS:• People who can draw meaning from
large data sets,• Link them to a plan of action,• Orchestrate the completion of the plan,• Then cycle back to the beginning to
measure and optimize for next time.
Visionary in finding solutions and advantages – such as bicycle delivery has dedicated lane not slowed by traffic using GPS tracking by individual for drop off expediency
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Harvard Q&A
Q: What differentiates companies that are usingdata correctly from ones that are not?
A: A massive impact measured by improvedfinancial performance, increased productivity,reduced risks and costs, and faster decisionmaking.
• HarvardBusiness ReviewandAnalytics
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Master Orchestrator Tasks
Take Data and Create Solutions…but what Data?• Self Reported – Timesheet, Surveys, Expense Reports, Policy Forms,
Family History
Tends to have the natural bias of the input source
• Ambient Data – Collected without input from the organization or person, examples:
• Calendar of events, likes, views, credit card purchases, webpages visited, apps downloaded, songs listened to
Eliminates the bias of the input source
A true Master Orchestrator can take this data and determine which blend is needed and what is useful vs. what is noise
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Remember You Get What You Measure
Call Center Example• Our call center costs were out of control. We continually had to
hire more people, retrain on key response criteria, repair customer complaints and our customer retention had slowed. All of this despite us handling more calls in a shorter time period with greater efficiency.
The Issue• We were measuring call volume (calls handled per operator per
hour) and call duration and never measured customer satisfaction or repeat phone calls per customer. As such, we became adept at handling a call quickly without resolving the customer’s problem.
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Transparency Risk
To Disclose our Use of Data or Not?This is a really big question!• What will customers think?• What are the risks of not disclosing?• Will the world evolve and do they know we are watching?
Ask yourself some simple questions:• Do you have a frequent shopper card?• Do you post on Facebook?• Do have a GPS tracker in your car?• Do you attend health fairs sponsored by your workplace?
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If you answered any of these yes……
Would you be upset if:• Your health information is used to set your benefit costs?• Your Facebook data is used to track your political beliefs
and sold to fundraising campaigns matching your interests?
• Your GPS determines that you fibbed about driving less than 10 miles each way to work and your auto insurance premiums go up?
• A retailer begins to send your teenage daughter information about infant clothes, formula, coupons for vitamins for expectant mothers?
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The Target Story
True StoryA man walks into Target fuming upset with the manager about recent information his daughter (16) has received. She is getting constant information about pregnancy, infant care and diapers. “Are you trying to encourage her to become pregnant he exclaims”
InvestigationThe manager feels really bad, calls home office, has no real explanation, but gets the family pulled from the mailing list and calls the gentlemen to apologize and tell him the mailers should stop.
The man explains he needs to apologize there were some things going on in his house he was unaware of. As it turns out his daughter is pregnant and Target knew before he did!!
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How did they know…….
Using predictive analytics and ambient data, over time Target determined the following:
• Working backwards from the date on an expectant mother’s register for her baby gift registry, they determined what occurs:➢ Approximately 6 months before she begins buying vitamins➢ Approximately 5 months before she changes lotions to using
natural scents and no toxins➢ Approximately 4 months out her vitamin regime changes to be
more pre-natal based and she may even have browsed the website for baby goods
In this way Target was able to determine when their customers were pregnant and was able to market to their distinct needs.
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There is a limit to what people will tolerate
Did you know:
• All voice queries asked of Siri are uploaded and stored on Apple’s servers in order to help “her” become better at answering the questions
• Because of this IBM has required this feature to be disabled on all of their employees cell phones as they are afraid their voice queries could reveal sensitive information to a competitor
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So what can our industry do?
Some Extreme Things to Consider:• It has become common place for life and health insurers to ask if
you are a smoker or non-smoker. We are now used to this invasion. It is commonly accepted by customers that smokers may have to pay more.
• Today we know personal genetics play a large role in your health and longevity. Perhaps a better way to accurately price risk would be to map each human genome and create a genetic roadmap of each policyholder to properly assess risk and charge customers based upon each persons individual genetic makeup.
Is this fair? Would this be tolerated?
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Evolution of Autos
New cars have lots of cool stuff1. Cameras
1. Performance Data Recorders
1. GPS Tracking Ability
1. Internet Connectivity
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What If……
Your cars front cameras constantly uploaded each one of your trips to the performance data recorder, and
The computer recorded the speed you traveled compared to the speed limit, all while
Data was captured about how hard you were braking and cornering.
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Good or Bad
Pros• In the case of an accident you
have video data of the crash to help identify who is at fault
• Defense against speeding tickets
• Proof of not running red lights
Cons• Use of the data could share
your personal data with others• Data could be used to show
your bad driving habits• Data could be subpoenaed in
a crash scenario to prove fault against you
• Insurance company could use data to rerate your premiums
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Where does it cross the line….where does it lead?
What if your insurance company pulled your prior year of driving history showing the routes you drove to determine your subsequent years premium?
• Would you be comfortable with them knowing exactly where you had gone everyday?
• Would you be okay with them rating the roads and only having the data on the road risk (5 – most risky, 1 – least risky)?
• What if the data showed you had stopped by the ABC store and because of that your risk was viewed differently than someone who had not?
Thinkofalltheotherthingstheycouldlearn……..
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Where will it stop
• It likely won’t….the ability to price discreet risks and gain competitive advantage pushes the need for more data
• We will likely continue to accumulate more and more data both self-reported and ambient in order to try and learn more about our customers and their habits
• As with the Target case – getting the transparency right will be paramount to maintaining consumer trust
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Tricky can be fun and revealing
Question:• Recently there is a new hit
game everyone is playing-Pokemon Go!!! What makes this game so awesome?
Answer:• The developers make $10M per day.• They can find places that people
gather and meet by determining how many Pokemon are captured in any given place
• They can see how people relate to each other by using location services to see who travels together
• They can see when people tend to frequent spots by tracking when Pokemon are captured
• They can sell all of this data to interested marketing partners
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The Lessons
We are now living in a data driven world• At this point we must learn to manage the data and use it to our
best advantage
• We will each need to become data savvy but our need for Data Scientists and Master Orchestrators will continue to grow
• Our ability to maintain our customers’ trust, not misuse the data, protect the data and not push the limit of what they are willing to share will drive the long-term success of our programs
• Learning what data is key and what is not will maintain costs and maximize efficiency and profitability
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Contact Information
For more information, please contact:
JohnRoberts,CPAManaging Partner │ Insurance Services GroupDixon Hughes Goodman1829 Eastchester DriveHigh Point, [email protected]
MattHowell,CPASenior Manager│ Insurance Services GroupDixon Hughes Goodman1829 Eastchester DriveHigh Point, [email protected]
