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Big Data Revolution by Patrick McSharry, Rob Thomas

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CHAPTER 3: REVOLUTIONIZING INSURANCE: WHY ACTUARIES WILL BECOME DATA SCIENTISTS

MIDDLE OF SOMEWHERE, 2012

INSURANCE COMPANIES ARE unique. It seems that a large portion of them are headquartered in fairly remote regions of the world, away from the dynamism of New York, Chicago, Los Angeles, or other large cities. Are they a product of their location — conservative and measured? Or is their location a product of them? After all, most insurance companies in fairly remote areas are the dominant employer in the area. Culture is important and location says a lot about culture.

Most insurance companies have been around for a long time. The Hartford was founded in 1810, MetLife was founded in 1868, Prudential was founded in 1875, State Farm Insurance was founded in 1922, and Geico started operations in 1935. Given the age and maturity of these companies, they possess many commonalities:

  • Application sprawl: They have hundreds of applications and tools for managing the insurance life cycle, ranging from underwriting systems, to policy administration, to customer relationship management.
  • Diverse policies: They offer many types of insurance: Auto, home, fire, flood, and many others. In some cases, they have thousands or millions of each type of policy.
  • Multiple channels: A mix of online, agency, indirect, and direct contact with consumers.

Perhaps the word that captures the commonality in long established insurance companies best is complexity. The insurance world displays complexity in ...

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