March 11, 2015 / 10:45 AM / 5 years ago

Fitch: Insurers Begin to Unlock Power of Big Data

(The following statement was released by the rating agency) LONDON, March 11 (Fitch) Fitch Ratings says in a new report that big data will be increasingly important to insurers' profitability, competitiveness and - in the long term - credit ratings. With bond yields low and competition high, management of profitability is key for insurers. Fitch believes early adopters of big data will be able to reduce fraud, price more accurately and control distribution better, thereby gaining a vital competitive edge. Those that are slow to adapt may lose earnings or market position. The term "big data" describes extremely large data sets that may be analysed computationally to reveal patterns, trends and associations, particularly relating to human behaviour and interactions. Tackling fraud is currently one of the main uses of big data by insurers. False or exaggerated motor injury claims, e.g. whiplash, account for as much as half of fraud in some insurance markets. Big data analytics enables the rapid identification of claims characteristics that flag potential fraud, which would previously have been much harder to uncover. Big data analytics is already widely used in motor insurance. For example, telematics devices that track drivers' mileage and braking habits enable insurers to adjust each policyholder's premium rate month by month to reflect the updated information on these risk factors. In Europe, insurers sold 4.6m telematics policies in 2014, an increase of 240% from 2012. Big data is starting to feature in health insurance. Insurers can provide policyholders with products such as wristbands that monitor physical activity, providing data for pricing that more accurately reflects each customer's individual risk profile. Some insurers use big data to assess their intermediaries by analysing, for example, the volume, value and persistency of the business they source. This enables them to optimise their distribution channels to maximise profitability, which may vary significantly by channel or individual intermediary. Using real-time tracking, insurers can immediately identify sales spikes by product or intermediary that may indicate under-priced or mis-sold business, allowing fast remedial action. The report "Insurers Begin to Unlock Power of Big Data" is available at or by clicking on the link above. Contact: David Prowse Senior Director +44 20 3530 1250 Fitch Ratings Limited 30 North Colonnade London E14 5GN Clara Hughes Senior Director +44 20 3530 1249 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: Additional information is available at Applicable Criteria and Related Research: Insurers Begin to Unlock Power of Big Data here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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