Insurers need to learn to share their data if they want to take full advantage of the mountain of information generated from connected devices, insurtech executives say. Along the way, somebody’s got to figure out who owns the data.
Presentations made during the Silicon Valley Insurance Accelerator’s Insurtech Fusion Summit held in South San Francisco last month showed that the industry is still grappling with this question. Insurtechies painted a picture of a connected future where carriers communicate with consumers through platforms that the customer chooses, such as Amazon and Facebook. The data generated by consumers who trade their privacy for a discount would be shared by all so carriers can more accurately measure risk and provide better service.
Denise Garth, senior vice president of strategic marketing for Majesco said millennials and Generation Z are willing data-sharing partners. “They are going to give us any data that we want as long as we give them something in return,” she said. “Remember, it’s all about them.”
Who Owns It?
But some of the speakers also held sharply different attitudes about who should control the data once it’s collected.
Jason Griswold, co-founder and chief operating officer of Rein, cautioned other insurtech firms not to get hung up on who owns the data that they collect, because nobody owns it. He said Liberty Mutual Group took “a massive risk” by investing in Rein’s digital drone insurance product in part because Rein didn’t claim any rights to the data.
“We love to make sausage out of the data, but we don’t own the data,” Griswold said.
On the other hand, LifeEpigenetics Senior Advisor Michael P. Curran said his company failed to make a deal with a “top 10 carrier” and decided to take a do-it-yourself approach toward data collection instead. “The fight was who owns the data.”
Michael Connor, chief executive officer of the Insurance Accelerator, said he doesn’t think Griswold and Curran were that far apart. Curran’s LifeEpigenetics reached loggerheads because its business model depends on the collection of a wide array of epigenetic data that can be used in aggregate to predict risks. Restrictions on use of the data — which in the end belong to the consumers themselves — would not serve that purpose.
Connor said whether data is singly or jointly owned depends on the context and what permissions exist with the customers that provide the data. Insurtechs must be sure consumers have consented to the data collection, be aware of any restrictions that could limit use of the information and make sure their data isn’t used for nefarious purposes.
Government regulations also come into play. Increasingly, governments are imposing rules that require companies that collect data from consumers to explicitly describe how the data will be used and with whom it will be shared.
Connor said most people are willing to share information, in an anonymous way, if it can be put to good use.
On the other hand: “The carriers look at their data as their corporate jewels, even though most of them are not taking advantage of that data because they don’t have the infrastructure in place,” he said.
Connor said insurers have no choice but to become more open to data sharing.
Some data-collection partnerships are forming. Russell said Roost, a Silicon Valley-based smart home products provider, has teamed up with several insurers to collect data from water leak detectors and smart smoke alarms that can be used to better predict the risk of homes equipped with the devices.
Similarly, Verisk has a partnership with several carriers to share automobile telematics data.
“They are all looking for magic data sources that will help them measure the risk,” Russell said. “Data and algorithms: That is the new special sauce. It’s all about what you can do with data and how you interpret it. It’s increasingly real time and localized.” But at the same time, the insurance industry faces a conundrum, he said.
“Insurance companies are trying to envision a future that is data driven,” Russell said. “They want to keep everything themselves. They don’t know what they are going to do with it yet. They don’t even have the back-end systems to manage the data right now.”
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