Insurance In The Connected World ReportDOWNLOAD The Report
Progressive Insurance is one of the largest U.S. auto insurance companies. The team turned to Hortonworks Data Platform to transform its business with massive ingest of new types of data. Progressive uses HDP® for ad placement and to store driving data for its usage-based insurance products.
Carriers interact with customers across multiple channels, yet customer interaction, policy and claims data is often isolated in data siloes. Few insurance carriers can accurately correlate acquisition, cross-sell or upsell success with either their marketing campaigns or customer online browsing behavior. Apache Hadoop gives the insurance enterprise a 360° view of customer behavior. It lets them store data longer and identify distinct phases in their customers’ lifecycles. Better analytics helps them more efficiently acquire, grow and retain the best customers.
Many carriers sell policies through agents. To prepare for sales calls (or to answer questions from prospects during those calls) those agents may need to look up details across multiple, disjointed platforms or applications. This takes time and decreases sales velocity. Unlike legacy data platforms, HDP stores data from many sources in a “data lake”. This permits a single lookup, without requiring multiple individual queries across different unrelated storage platforms. Agents prepare themselves more thoroughly, and they can make more calls over a given time period, helping grow revenue. Insurance companies can also use the same type of single view to understand which agents are most productive selling their products—offering incentives that promote top performers or de-certifying the chronically unproductive.
Once customers agree to buy a new policy, the agent and/or underwriter still needs to process the application documents. This can be a lengthy manual process that causes leakage. Speed is important, but so is accuracy. One Hortonworks subscriber in the insurance industry built an enterprise document cache on HDP. Apache HBase caches the post-transaction documentation, with meta-tags that speed up processing. And because HDP’s YARN-based architecture supports multi-tenant processing on the same data set, document tracking does not slow down risk assessment or other analytics required before initiating coverage. Efficient document processing reduces costs and improves agent and underwriter productivity.
Insurance fraud is a major challenge in the industry. According to the FBI, “The total cost of insurance fraud (non-health insurance) is estimated to be more than $40 billion per year. That means Insurance Fraud costs the average U.S. family between $400 and $700 per year in the form of increased premiums.” Because there are more than 7,000 insurance companies that collect more than $1 trillion in premiums every year, criminals have a large, lucrative target. They can easily hide their tracks as they perpetrate schemes like premium diversion, fee churning, asset diversion or workers’ compensation fraud. One of the largest insurers in the United States uses HDP for machine-learning and predictive modeling that employs rules-based flags on streaming data to catch more fraudulent or invalid claims. As claims data flows into the system, real-time alerts help special investigation and claims analysts prioritize their investigations of claims with the highest likelihood of fraud.
Insurance companies understand risk and—as in other industries—they are moving from reactive to proactive uses of their data. Any claims adjuster has seen accidents, fires or injuries that could’ve been foreseen and maybe prevented, drawing conclusions like: “He shouldn’t have been out driving in that weather,” or “Those wires were long past their replacement age.” Now insurers are capturing and sharing that insight with their customers before the losses occur. With these risk-reduction and prevention services, carriers share real-time analytics with policyholders, so they can prevent mishaps. For example, they can establish algorithms to identify emerging high-risk phenomena having to do with foul weather, disease epidemics, or equipment recalls—and provide timely alerts that help their customers protect themselves and their property. One Hortonworks customer that offers car insurance is working on real-time alerts that will notify drivers when a strong storm will affect a particular stretch of road and then also suggest less-risky alternate routes.
Moral hazard describes the phenomena of one person taking more risk because someone else bares the burden of that risk. When a company offers an auto insurance policy, they face moral hazard because of information asymmetry—policyholders know more about how they actually drive than does the carrier. Drivers may drive a bit faster or watch the road a little less closely because they know that they are covered in the event of a collision. Carriers set prices to cover that moral hazard, and so the safer drivers end up subsidizing those who take more risks on the road. Usage-based insurance (UBI) has the potential to reduce information asymmetry and moral hazard by rewarding safe drivers for their good behavior. A major insurer runs its UBI products with telematic sensor data stored in HDP. Prior non-Hadoop processing captured only a subset of UBI data streaming from sensors in policyholders’ cars and extract-transform-load (ETL) processes delayed availability of that data until the week after capture. With HDP, the company captures and stores all driving data from customers that opt in to UBI, processes the larger dataset in half the time, and uses predictive modeling to reward those drivers for how they actually drive rather than guessing on how they might drive based only on their age, type of car, location and prior history.