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Big Data in the field of life insurance

Life insurance has always been based on data analysis. Accident statistics and the insured's personal information group people into different risk categories and create payout funds. Digitization of the industry and Big Data help computerize many manual processes reducing insurers' costs for processing applications and administration. Market participants believe this will lead to a decrease in the insurance cost in a competitive environment.
Big Data in the field of life insurance

With the advent of Big Data, financial products may change: insurance companies can now analyze the interests of a person, his lifestyle, even habits. As a result, insurers are now able to offer the customer an already tailored product that takes into account their basic needs. “Thanks to Big Data, it is possible to analyze the client profile, determine the target audience for insurance offers and scoring prediction of occurrence of insured events, etc.,” says Vitaly Lyubimov, Managing Director of LIC Halyk-Life.

Big Data speeds up customer interactions, automates communication and quickly creates the most profitable offer, according to Nomad Life employees. “The Big Data analysis results can be used as a very effective tool for determining customer loyalty, cross-selling forming a customer portrait. When a person who already uses LIC services, understands the benefits of an insurance policy and trusts the company, is offered to expand the range of insurance coverage or is recommended to become a member of a new program, the offer is received much better,” says Kairat Chegebayev, Chairman of the Board of LIC Nomad Life.

Through mobile applications and various gadgets LICs will be able to receive and use data on the actions of the client, have a more detailed picture of what is happening to him in the future. For example, it will be possible to track the state of a person’s health through an online medical service and, based on the data, develop convenient and profitable insurance conditions this way. “With the help of such data, insurers can also deal with fraudsters and make the main processes for issuing insurance contracts more effectively, receiving insurance premiums and payments more automated, fast and convenient for insurers,” says Azamat Yerdessov, the Board Chairman of LIC Freedom Finance Life.

Big Data analysis is already being used in many areas - to ensure security, diagnose and prevent diseases, predict accidents and disasters. In business and marketing they predict customer behavior, optimize costs and the production process, assess solvency, and predict the dismissal of employees based on the big data. “Based on customer data that is accumulated both in LIC and open sources, such as social media profiles, for example, it is possible to create advertising campaigns to promote insurance products and attract new customers. As for the Dig Data impact on insurance programs, as a result of using it, the client will be offered a personalized product with all his preferences and needs considered. Insurance rate making has always been based on data analysis, probability theory, the theory of large numbers and mathematical statistics, therefore, with the advent of new technologies, the use of Big data becomes a logical continuation,” emphasizes Gulzhan Dzhaksymbetova, Chairman of the Board of Centras Kommesk Life.

What data is collected by Kazakhstani LICs

Halyk Bank opened a “Data Factory” last year and continued to develop the strategic direction of Big Data, which, in turn, allowed taking into account the entire array of data created within the bank in order to offer customers only the highest quality and demanded services. Halyk-Life is planning to use the parent company’s experience and introduce big data analysis technologies. “Despite obvious advantages of Big Data, there are certain difficulties in legislative regulation for the economic and social development of society, primarily related to the protection of personal data.

Considering that the world has relatively recently entered the digital era, the legislation does not yet have time to adequately regulate the protection of personal data. Legal science has not yet fully formed the necessary definitions and concepts of Big Data legal regulation. And this, by the way, is a global problem and not just local,” says Vitaly Lyubimov.

LIC accumulates all personal information on its clients and their insurance agreements, this is a very large amount of information. For example, over a million individuals and more than 23,000 organizations are insured in Nomad Life. “We are at the very beginning of the journey. We believe, it is necessary to determine the rules for the personal information use and legislative regulation of such operations as client verification, confirmation of the fact of received personal information, its transfer to third parties,” notes the Nomad Life executive.

Insurers get information in accordance with the law under the terms of the contract concluded with JSC NLO; this contract is binding on all insurers. JSC NLO, in its turn, has an SIDB (single insurance database). “If LICs are given access to state databases with extended information about individuals and legal entities, same as second-tier banks, the work processes of insurers will be modernized; new more beneficial and convenient life insurance services and programs will be created. With regard to legislation improvement, it would be desirable to regulate it in the part where we could work not only with help of the National Loan Office but directly with state databases,” concludes Azamat Yerdessov.

Photos are from open sources.

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