Insurers essentially sell risk, so management of this risk is not taken lightly in the industry. However, because insurance companies have been measuring and weighing risk before the data science industry bloomed, many have fallen behind on the lastest technologies and best practices for data collection, management, and analysis- all of which are required for evaluating risk.
Here are three best practices that every insurance company should adopt to improve risk managment:
Having a Robust Data Warehouse
Insurers started collecting data before it was cool, so they aren't strangers to data warehousing. However, with the massive amounts of data that come from a whole host of sources (such as social media, smartphones, health statistics, and accident history) data warehousing has become a bit more challenging. This is why a robust data warehouse is no longer just an option for insurers- it's a requirement for proper risk management.
Insurance companies collect an extensive and ever-changing amount of data regularly, so scalability and flexibility are essential. This is why we recommend companies hosting their data warehouse in the cloud. The cloud allows insurers to quickly scale up if they run out of storage, and requires no maintenance making it the most cost effective option as well.
We understand insurance companies house sensitive information in their data warehouse, and this makes switching to the cloud seem risky due to security. Luckily, with advances in cloud technology, like Amazon Web Services, it's been easier to ensure your data is secure in the cloud.
Comprehensive System Integration
When assessing risk, many factors are scaled against each other. However, much of the data sources needed to weigh risk are in different systems, making it extremely difficult to calculate this risk, directly affecting the insurance company’s profitability. This is why using system integration is important for effective risk management.
Every system should be pointing to one source, so underwriters can have a single, clear, enterprise view of all risks, allowing them to accurately quantify these risks, and make data-driven pricing and coverage decisions.
Risk Reporting and Data Visualization
Going along with system integration, the best way to view all of your data at once is through reports and data visualizations. These tools help executives monitor the health of their operations with one single glance, and quickly gain better insights into ways to remain profitable and competitive in the industry.
Even better- with tools like Tableau, your reports are no longer reserved for monthly meetings. With your systems integrated, and your data warehouse optimized, you can always have your finger on the pulse of your business. If you're curious what these visualizations can look like, check out some of our data visualizations here!
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