General insurer IAG will pilot a range of big data technologies in coming months as it works towards a long-term goal of tailoring insurance prices to individual customers.
IAG group CTO and CIO, Asia, Ram Kumar told an FST Media conference yesterday that the group had selected three business areas to undergo five- to seven-week pilots this year.
Kumar said the projects would focus on areas with a “direct impact on the customer experience” in Australia and New Zealand, although he declined to disclose specifics.
The pilots – designed to focus on business benefits, not technology – were expected to inform an IAG big data strategy, which would be aligned with its existing enterprise information management regime.
Kumar told iTnews that he had put together a group of six to eight business representatives who would identify key business areas for the pilot with executive sponsorship.
“We are starting to work closely with industry research groups of the world and vendors to get some real and successful case studies about how we can bring external and internal data sets together and what value it brings to the business", he said.
“We’re doing a lot of investigation work. We just want to make sure that whatever technology we pick for predictive modelling and analytics gives us the best sustainable business value and importantly, puts technology and data in the hands of the business, not technologists, so they can do the analytics they need in real time, or near-real time.”
Calculating the price of insurance
Since the devastating Queensland floods in 2011, Kumar said IAG had begun using more data, including geographical information, to inform insurance pricing.
He said the future of insurance called for “one-to-one pricing” based on a wider range of information such as customer behaviours, preferences and income.
“Insurance premiums are going up; one price is not going to fit everyone in the future,” Kumar told the conference.
“We need to have one-to-one dealings with customers to understand their lifestyles, their behaviours – that’s how we can price [products] for a customer, rather than a group of customers.
“That’s the future of insurance: it’s all about one-to-one pricing. The more that you know about your customer, the better you can deliver personalised and superior experience for the customer.”
Kumar expected IAG to be able to tailor insurance products to individuals within two to three years, noting that it would likely abandon the one-to-one pricing goal if the effort stretched beyond that timeframe.
He described the insurer as a risk-averse organisation that would adhere to privacy and APRA regulations.
“It’s a journey of trying to get more value out of the data while keeping in mind privacy, security and governance.”