No More Denial: Data. Driven. Decisions.
Dating back to the founding of the Equitable Life Assurance Society in London by James Dodson in 1762, the insurance industry has used data to improve outcomes and reduce risk in their decision-making process. Over the centuries, the evolving discipline of actuarial science has used data to create the complex models that our industry relies on to create and refine sophisticated insurance products and services. The pencil and paper that Dodson and his colleagues in 18th Century England used to make their calculations back then could not compile and analyze the petabytes and exabytes of data that is done today, yet we have been slow to translate these valuable bits and bytes of data into our decision-making process.
Today, in the early days of the 21st Century, there’s just no excuse for business decisions that are not supported by persuasive data – especially in insurance, of all places. Now, in full disclosure, I’m very biased. I am a data person. As a little girl, I carried around notebooks full of stats that I tracked around the house (such as those dials on the electric meter, the length of anything I could line up against my wooden ruler and the weight of anything that fit on a scale). Charming, right? Even today I maintain a pretty intense workout routine primarily motivated by the dozens of data points collected from multiple sensors. In fact, my internal data-driven decision-making framework is what drew me to telematics in the first place. The opportunity to marry the fascinating data of how people drive with human behavior (any other Richard Thaler fan-girls out there?) to actually make drivers aware of their driving behavior and put them in control of improving their own safety.
So, with this great opportunity before us, why is it that we are not staring hard at the data to make decisions on how to make progress here? Here are three ways to help you leap right to the front of the telematics success line and avoid some common pitfalls:
- Know your customer: Your customer is actually not the guy whose nameplate down the hall says “VP”, “SVP”, “Pres,” “regional manager,” … You do not have to guess what your customer wants, telematics has been used for insurance for a more than a decade. There are now millions of data points out there to tell you exactly what they care about, what questions they’ll ask, how they can be motivated and engaged. You don’t have to wonder and guess. You don’t have to ask your peers or your manager. (My colleague Ross gives more color to this unexplainable phenom in this blog.)
- Pick the right dance partner: I love this industry. The people are some of the smartest and kindest that I’ve had the pleasure to meet. But kindness doesn’t lead to profitable growth. Find yourself a proven partner who has actuarial acumen, credible volumes of data, and financial security. Yes, I am one of these partners, so of course, I say this and believe Arity brings all of it to the table. But above all, what I would like to see is that once you go through all the work related to deploy this kind of program, you actually, and quickly, achieve success.
- Just use the data: Good golly it’s a lot of data! More than I could have ever imagined when I was filling up my childhood notebooks. If we use it correctly, we should be able to accurately, precisely price (not swag math or conservative judgmental selections) to accurately and confidently identify that a crash occurred (not ‘maybe it was a crash’ or candy crush!). This level of accuracy is hard to achieve, but it is very possible. Between the cloud and the enhanced level education that data scientists are entering the work field with, we have a world-class understanding of drivers, their behaviors and their crashes. You can too.
Yes… what we do is not easy, there is a reason we were hired seconds after we got our degree. The amazing thing is that it’s a great job! But our thinking needs to evolve and we need to use all the tools we have to improve our models and therefore our ability to make better decisions.