The INSURTECH Book

From Claim Settlement to Claim Prevention – How Insurers Can Make Use of Predictive Analytics to Change their Business Model

By Bert F. Hölscher

Partner, Arkadia Management Consultants GmbH

The main purpose of insurance is for insurers to settle claims caused by accident or damage. Big data and predictive analytics have the potential to change this operational expectation by predicting and preventing claims. New technologies such as the Internet of Things (IoT) offer a completely new approach to the business model of insurance companies. By collecting, analysing, and using all sorts of data sent by insured customers or insured assets, insurance companies have a much better chance to prevent damages or accidents even before a claim occurs.

An insurer’s ability to process and analyse large amounts of varied data and data sources like Google does, to generate deeper business insights, is an emerging and fast growing mega-trend. Other industries such as retail banking, telecommunications, and energy have already shown how they are reshaping their business models by leveraging new data sources. For example, energy providers use smart metering to collect energy usage data of private households to improve energy efficiency. Independent Internet applications such as “smappee”¹ will turn private households into smarter, more energy-efficient homes, by providing real-time energy readings as well as consumption costs to allow appliances to be switched on and off remotely. By combining ...