Insurance: Where’s the Risk?

By Jeff Hong, Global Industry Marketing Lead, IBM Systems

March 20, 2019

Insurers are facing extreme competitive challenges in their core businesses. Property and Casualty (P&C) and Life and Health (L&H) firms alike are highly impacted by the ongoing globalization, increasing regulation, and digital transformation of their client bases. Clients are increasingly seeking digital, personalized experiences and offers. Uber and other unicorns are challenging how insurers model and price risk. For example, as an insurer, how do you service and underwrite the health, life, business and property of an owner/chief creative officer of an ad agency who is a prolific big wave surfer and who leases their house on Airbnb when traveling? The complexity of today’s customer insurance profile is driving the need for new solutions.

 

More data to analyze, to store, and to safeguard, but you knew that already.

 

The answer is of course, data.   Insurers are rapidly going digital, adopting cloud and IoT to capture the tidal waves of granular data about their clients’ activities. Artificial Intelligence (AI) and machine learning (ML) drive new insights through analyzing this massive data at scale. To reduce the size of their IT infrastructure footprint and investment, insurers are moving non-proprietary workloads onto public clouds. More often than not, it won’t be just one cloud but multiple clouds.   Industry analysts confirm that 78 percent of enterprises expect to be utilizing three or more different clouds within the next two years.

On the downside of going digital, an average financial services firm is targeted by cyber criminals 65% more often than a firm in other industries, according to the IBM Institute of Business Value. Crimes ranging from system cyber-jacking to outright security breaches can impact a firm financially in the short term and in the longer term with potential permanent loss of both revenues and customers. Federal Anti-Money Laundering (AML)/Know Your Customer (KYC) regulations further complicate data handling requirements. Violations can result in significant fines, long-term reputational risk damage and even to cease-and-desist orders.

Privacy regulations such as HIPAA and now General Data Protection Regulation (GDPR) require insurers to take care with personal data or face significant penalties. While GDPR impacts firms with E.U. clients only, it is not unreasonable to expect that other regulators may impose similar data governance requirements. Firms need to identify data sources and tag personal data as such. Regulations such as GDPR amplify the need for consistent data policies across a hybrid multi-cloud system. Furthermore, most firms don’t know where all personal data is currently stored and how to find this data.

 

How to become a data-driven business. Truly.

 

Today and moving forward, insurers need to obtain maximum value from their data, and can do so by adopting a modern IT infrastructure that is open and designed for hybrid multi-clouds, that is secure, that supports AI, and enables their transformation to a cognitive enterprise. AI can help to simplify tasks such as fraud detection and risk analysis, helping insurers extract value by finding patterns and details in petabytes of unstructured data fast.

IBM has a long history of technology innovation and of expertise in the insurance industry. To maximize the ROI of data, IBM offers high-performance and scalable storage solutions that both accelerate and simplify the lifecycle management – discovery, curation, analysis, manageability, and protection – of data of all kind seamlessly.   The IBM AI Infrastructure Reference Architecture, IBM Spectrum Storage for AI, IBM Cloud Private, and hybrid multi-cloud solutions offer differentiating values for insurers as do continued IBM investments in open technology including Apache Spark, Kubernetes, and Docker.

 

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