Why Big Data Is a Big Deal in the Insurance World

 

It can very easily be said that both big data and FinTech are game changers. Using modern technology, they are changing how we interact with the world. And when you combine them, you can create an explosion of innovation and potential.

Nowhere is this clearer than in the current insurance market. FinTech began linking itself with insurance rather quickly and there are numerous startups that illustrate how well FinTech and insurance collaborate. Sureify Labs, for example, uses the new technology to solve the problems the modern insurance companies are facing and RenewBuy gives motorists an easy way to research and purchase insurance.

Then, with the addition of big data, the entire process is taken to another level. Mass amount of information can now be brought in at record speeds. When FinTech and big data are combined, these juggernauts change how people are brought in and analyzed by companies, as well as change how easy it is to access accounts. Modern technology is speeding up and simplifying the various processes, which is fantastic news for many people.

However, there is also a very real dark side. Big data is the proverbial apple, and once that knowledge is consumed the results could be devastating. Imagine a system that can easily pinpoint who (for profit/risk reasons) may be considered insurance risks and put that power in the hands of people controlling the decision making process of insurance companies. If insurance companies have the ability to charge based on calculated risk, a percentage of the population is going to find themselves facing sky-high rates or possibly being priced out entirely. If they are not given exorbitant rates, they may find themselves outright refused coverage. So the question is: Do we allow insurers to set up this system? Do we re-create insurance so people are charged based on big data risk factors, reducing costs for some and bankrupting others? The decision made in this area has the potential to dramatically change society.

There is no denying that big data is an amazing technological breakthrough and FinTech is set to turn the financial world on its head, but we must be very careful when it comes to dealing with the negative uses for these innovations. Yes, they are making today’s lives easier, but we have to be careful that it’s not a devil’s bargain.