Put simply, data science is the application of scientific methods to business data to effect action. Data science includes technological tools and statistical methods to provide information to management to assist them in decision making and risk management. It enables us to extract insight from data that can lead to innovation and competitive advantages. It can also be a useful tool to develop an early warning system that picks up problems before they become too big to handle.
Insurance products are built on data. With the rise in technology, more data is being generated and accessed on a daily basis. Data Science not only helps insurers handle all this new data, but it also provides new tools to extract new insights. These insights can provide more information about customer churn, attrition and retention. This can supplement existing models to better price products and know which target markets to focus on. Actuaries can also start incorporating new datasets in risk models that may help them make more accurate predictions.
Increases in computer power are already allowing Data Scientists to automate repetitive manual tasks such as finding and preparing data. This automation will extend to more complex functions which will, in turn, save time and make more efficient use of firms’ resources. Software and hardware will continue to become cheaper and more powerful and more and more sources will be connected through Application Programming Interfaces. This will allow for the generation of Big Data sources where countless new insights can be discovered. Companies will compete to curate and ensure only the highest quality of data is allowed in.More powerful platforms will host, maintain and secure these datasets in the Cloud. The Cloud will also allow more firms access to the latest hardware and software to crunch through this data via the Internet. Data Scientists will be able to orchestrate massive data analysis and see the outputs on their mobile phones. As new technologies emerge, we will see more and more automation but also the ability for more powerful analysis. One of the biggest challenges would be to ensure we continue to apply innovative thinking and generate new ideas of how to analyse this data to solve ever-evolving business problems.
Valerie du Preez (FIA), Dupro AdvisoryMichael Jordan (FASSA/CERA), Dupro AdvisoryWill Skertic, Data Scientist BeazleyNick Deveney, Director of Consulting Eden SmithTo learn more about the benefits of Data Science and its opportunities, as well as how to get started, contact info@actuartech.com
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