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White Paper

Data in the Digital Era – Driving New Business Models and Results for Insurers


Data is not a new proposition or challenge for insurers. However, in today's data-driven digital era, do insurers need to think of data differently as they embark on their digital transformation journeys? Is 'Big Data' mere hype or is it a new business opportunity?


In this white paper, we describe how insurers are using data in each line of business in this new digital era. The paper also recommends that insurers use an outcome-driven approach to define their data strategy and focus on using both internal and external data to develop a holistic view of the customer who is at the vortex of this disruptive transformation.

Insurers and Data - Insurers have been using data for decades — in fact, some may have even been over-enthusiastic about capturing data - both, about their customers and the risks they insure against. While most insurers have terabytes and petabytes of data in their production and archival systems but most use a small percentage of the data they collect. Insurers therefore have a big opportunity to unlock the real power of data to realize a business differentiator.

Reimagining data in the Digital Era - The five concurrent disruptive technology innovations (viz. pervasive computing, cloud, social media, Big Data and machine learning), which are unique to today's digital era, have provided insurers the ability to make this quantum leap. Within the insurance industry, data in the digital context has different meanings for different lines of businesses. However, across all lines of business, data is used to drive innovation and effectiveness in business models and efficiency in operations.

360 degree view of a customer is the thing of past, now the digital era has provided data from several sources, including social media and sensors (Internet of Things), opening up a larger opportunity. Insurers can now complement their 360 degree internal customer view with an additional 360 degree view of the same customer derived from these external data sources. It is at the intersection of these two views that innovative business models of the future will evolve.

Enabling Insights -Based on our experience, we recommend Insurers should first pinpoint what insights can provide and then think of the necessary data, its source (internal or external or both) and the infrastructure required to enable these insights. While a robust data or analytics infrastructure is certainly important, we recommend that organizations ensure that investments in long-term enterprise data foundation and strategy deliver continuous business value. Insurers should focus on how quickly they can learn from their experiments with data and analytics models and adapt fast, as business environments change and new technology innovations make solving business problems easier.

Conclusion - Digital enablement leads to innovations and new business models in the insurance industry and the role data plays will continue to grow. There is a need for a holistic approach towards an enterprise level data strategy and the enabling architecture and governance, to realize incremental business value.

The success of the industry will depend on its ability to process, leverage and exploit data to its advantage. Insurers must be smart and opportunistic in repositioning itself within its regulatory and privacy constraints. The sooner insurers learn to effectively exploit data, combining structured and unstructured data from both internal and external sources, the faster they will be able to make it a source of true competitive advantage and turn the promise of Big Data into reality.

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