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Wednesday March 4 2015 at 10:38 AM
Martin J Frappolli wrote a new spotlight post
By Marty Frappolli, CPCU, FIDM
You keep seeing headlines about "Big Data," and perhaps you think "that's just for the information technology people to worry about." We hear a lot about how important Big Data has become, especially in our insurance business. At the annual meeting of the Insurance Data Management Association in Philadelphia last spring, speakers and attendees were all buzzing about Big Data. What is it, and why should you care?
Insurance has long been a data-driven business. We predict the future (losses) by examining data (exposures and losses) from the past. That hasn't changed. Data managers, actuaries and the technology people still gather data from the past to help predict the cost of future losses. This data—even before computers—is "structured" data. Whether it is on a paper ledger or stored in a big mainframe computer, the data elements (premium, territory, exposure, loss amount, limits, deductible, etc.) are tagged, orderly, consistent and quantifiable.
What has changed—with modern distributed computing—is the introduction of mass amounts of external data that may affect predictions of future losses, and the ability to mine "unstructured" data for even greater insights. For example, a claim folder of the past contained an adjuster's notes on the claim, perhaps in longhand. A modern claim folder is stored electronically, but it still has those same free-form (unstructured) notes. With modern technology, data scientists can discover ways to pull meaningful information from that previously underutilized data.
IBM has tried to define Big Data by citing its volume, variety and/or velocity. Modern computing and storage permits massive volumes of data to be collected and processed; variety comes in the forms of traditional structured data, emails, PDFs, handwritten notes, data from mobile devices, and more; velocity refers to the speed at which data flows and its shelf life.
What’s the Impact of Big Data?
Insurers with qualified data scientists can find profitable pockets of insureds within larger groups that have been generally regarded as suspect risks. Big Data is simply a way to refer to the massive amounts of information—structured and unstructured—that modern technology has made available to organizations that need to make market and pricing decisions.
Being a data manager or data analyst is important and demanding work, but it typically involves working with predictable structured data. Data scientists go a step further, having the quantitative skills to solve problems and find market opportunities by analyzing massive amounts of Big Data. More than ever, insurance organizations are realizing the value contained in their data. A Big Data approach can be key to unlocking that value.
What Can You Do to Embrace Big Data?
1. In a large insurance organization, talk to the data manager. Discover what efforts are already under way to capture the valuable information hidden in your data. Ask yourself and your peers, What would I (you) like to know about our existing and potential customers? What claims data would enable us to make better underwriting decisions?
2. In any size organization, learn more! The more you know about Big Data, the more you can discover ways to unlock the value in that data.
3. If you can dedicate the time, explore Massive Open Online Course (MOOC) options. These college-level courses are frequently offered at no charge, and the selection grows daily. For a quick hit, you can find links to free information on Big Data at http://www.vocus.com/blog/where-to-learn-big-data-free-resources.
Marty Frappolli, CPCU, FIDM, is a Senior Director of Knowledge Resources at The Institutes.
Tuesday March 3 2015 at 3:33 PM
Peter Miller wrote a new spotlight post
By Peter L. Miller, CPCU
President and CEO, The Institutes
As president and CEO of The Institutes, I hear from insurance and risk management professionals in a variety of positions, as well as from our board of trustees, which is made up of executives and CEOs from many major property-casualty insurance companies. As 2015 kicks into full swing, three trends have emerged that are having a significant impact on the industry this year.
1. Cyber Risk
69% of U.S. CEOs are worried that cyber threats will impact their growth. (PwC’s 2014 U.S. State of Cybercrime Study)
Technology security breaches seem to make headlines every day, showing that in our internetworked world, almost every organization faces some measure of cyber risk. Cyber risks include theft or manipulation of sensitive or private information, computer fraud, and viruses that can destroy data and damage hardware and business operations.
Often times, the responsibility of managing cyber risk threats lies on IT staff. While we certainly need tech experts to protect us from hackers, we as insurers also have a responsibility to protect our customers from this type of loss. Good risk managers and insurers prepare for known risks and find ways to mitigate those risks.
We can protect and plan for these types of loss exposures by conducting a detailed insurance-gap analysis and network-security surveys to assess vulnerability; developing a security policy review; and assessing network and Internet connectivity vulnerability.
To learn more about cyber risk:
Read the 5 Cyber Risk Facts Insurance Professionals Need to Know" by Martin J. Frappolli, CPCU, FIDM, AIC, senior director of Knowledge Resources here at The Institutes.
Build your expertise in this area with our Managing Cyber Risk course.
2. Captive Insurance
At its most basic level, a captive is an insurance company owned by its insured. There are many types of captives, including captives owned by a group of insureds and captive facilities sponsored by someone other than the insured.
While captives as an alternative form of risk financing represent a small percentage of the global insurance market, this application has gained widespread acceptance within the past few decades. Currently there are more than 6,000 captive insurers worldwide in 64 domiciles with more than $50 billion in annual premiums [Joanne Wojcik, “Captive Insurance for Terrorism Risk Will Be Stymied if TRIA Is Not Renewed,” Business Insurance, March 16, 2014, www.businessinsurance.com/article/20140316/NEWS06/140319866 (accessed February 26, 2015)].
Captives offers many benefits, including reducing costs of risk while increasing insurer cash flow, providing access to coverage that would not typically be available, and improving the claims handling and loss control process.
Based on the industry’s growing need for a comprehensive understanding of captive insurance, The Institutes are developing a new captive insurance course, which will be released later this year. Stay tuned for more details.
3. The Rise of Big Data
While insurance has long been a data-driven business, one of the major needs we’ve seen is the ability to sift through tremendous amounts of data and turn it into information to predict future losses. This large amount of data is often referred to as “Big Data.”
With the billions of devices connected through the Internet, we can easily gather and collect even more data through telematics, data analytics, and other techniques. However, we must also be able to think critically while understanding the analytics and mechanics of data analysis. Developing these skills allows for easier collaborating with claims and other parts of the organization, identifying the right customer for the right product at the right price at the lowest risk, and monitoring risk in real time.
In response to the ever-changing technology topics and trends, The Community provides opportunities to explore and discuss these topics with fellow risk management and insurance professionals. Take a look at the following posts, "The Rise of Big Data," and "Wrap Your Big Brain Around Big Data," for example, and share your thoughts.
Monday March 2 2015 at 1:20 PM
Bhaumik Oza wrote a new wall post
I am going to take the AINS 22 segment A only this weekend. Now I know for most of you here it might be child's play but this is my first exam with the Institutes and decided to test the water first before becoming really confident about their difficulty level/type of questions or the exam structure. How is the difficulty level and any suggestions on any material/practice exam ? I am enrolled in the online learning course.see less
Monday March 2 2015 at 1:02 PM
Margaret Hurley wrote a new wall post
I was curious on how the testing dates worked for the CPCU, I am currently studying for the CPCU530 anticipating to take the exam in June and wanted to see what dates were available for then. When I went to the exam information section I noticed that it said April 15th - June 15th 2015. Once yousee less
Monday March 2 2015 at 12:54 PM
Keona D. Dixon wrote a new wall post
Passed AINS 22 & now I have my AINS designation! Two more courses to go in order to complete AIC; the motivation you get from completing one designation certainly fuels the desire to obtain more, feels good!see less