With insurer CIOs relying more and more on data analytics capabilities to meet customer expectations, unstructured data sources (information in forms like handwritten notes, photos, and videos) pose significant challenges. Novarica’s recent brief on this matter, based on a study of 44 insurers, found that incorporating unstructured data could be beneficial across the insurance value chain, most notably in claims.
While unstructured data analysis is still an emerging capability, insurers recognize the value of incorporating data and analytics into the claims process. More than 40% of carriers have operationalized programs around unstructured data, and more than half report some interest or a pilot in the works. Currently, claims data is used in tactical areas like claims fraud and severity indication, but rarely in strategic areas such as underwriting.
CIOs observed a growing demand for unstructured data claims efforts to demonstrate quantifiable benefit. 63% of large property/casualty insurers cited specific benefits from using unstructured data. These benefits included reduced losses and improved ability to detect problematic claims, and one carrier even identified new related comorbidity factors in workers’ comp claims. That said, benefits in claims remain subject to the debate of measuring leakage on a claim. Insurers should be mindful that impatience for quantifiable results may also impede their ability to discover new, unexpected benefits in the future.
When it comes to the challenges of adopting unstructured claims data, insurers tend to perceive business-related challenges as the most daunting. Some of these business challenges include funding, ROI, access to tools, and data integrity. Carriers that do not have current efforts underway most often struggle with the requirement of clear ROI to receive funding, stalling data mining efforts. The other common challenge to securing funding comes when carriers have core transformation efforts underway.
Midsize insurers cite the adoption of insight tools like Hadoop and NoSQL as an obstacle more than their large counterparts. Some examples of vendor tools and technologies that reflect the growing interest in unstructured claims data include Chisel, Pentation Analytics, and Groundspeed Analytics. Insurers should remember that the benefits of leveraging unstructured claims data might not be apparent all at once, but the competitive advantage will fall to the carriers who invest in technologies to use their data for new insights.
To learn more about the benefits, challenges, and current uses of unstructured claims data and to see examples of vendor tools and technologies in today’s market, check out our latest Executive Brief, Unstructured Claims Data Usage in Insurance.
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