Business schools are fond of saying that the Chinese word for ‘crisis’ is composed of two characters – one representing danger and the other opportunity. That’s a bit of a stretch. But, one thing is certain, when it comes to mitigating the impact of potentially dangerous events, China’s insurance industry is making the most of a very large and fast growing opportunity.
It’s quite an achievement for a sector that really only got started in 1995 with the establishment of the “Insurance Law.” And, as China’s insurance companies and their operations have grown to meet demand, the CIRC (China Insurance Regulatory Commission) has continued to introduce new regulations to ensure stability.
New regulations, such as C-ROSS, will help Chinese insurers to be more efficient with capital management and lower risk. However, harnessing the data needed to effectively and accurately report on the C-ROSS requirements which came into force this year, is very new for many firms.
Technology is of course a big part of the equation. Many insurers have robust customer facing platforms and technology can help them to address their customer needs, but increasingly these systems will need to be the basis of a much more sophisticated data analysis platform – Advanced Data Analytics platform (ADA).
ADA is the technology that can not only help firms to meet their regulatory requirements, but increasingly act as a competitive advantage in the industry. It can optimize processes to leverage useful internal and external data and by using advanced math and financial theory to analyze and understand the costs of risks. New sources of external data, new tools for underwriting risk, and behavior-influencing data monitoring are the key developments that are shaping the industry.
Data from social media and multimedia, smartphones, computers, and other consumer and industrial devices are a great source of behavioral information for insurance companies, and that is just one example. The increasing amount of third-party data sources and the release of previously inaccessible public-sector data are reducing insurers’ dependence on internal data.
Real-time monitoring and visualization in analytics modeling also enables insurers to underwrite other emerging risks that were underinsured. Now, insurers can pose new questions and better understand many different types of risks.
ADA calls for IOA
If the growing need for advanced data analytics (ADA) is obvious, what may be less so is how that data is transported from its source to its point of use. That’s further complicated by the fact that there are a wide range of sources, some automated some not. There are also intermediate layers that may involve data formatting, editing or interpretation and, finally delivery to the consumer for analysis or other use.
As insurers continue to use more data for their ADA, interconnectivity becomes increasingly important. They need to be able to connect with clients to allow for efficient data exchange. In addition, further connections are needed to third-party data sources.
It is clear that the digital insurer of the future needs an infrastructure that is based on an interconnection oriented architecture (IOA). Specifically, one that is designed to facilitate a company’s ability to pass data – structured as well as unstructured – between one another.
That’s not an isolated opinion. In fact, the title of one of Gartner’s most recent reports is
“Colocation-Based Interconnection Will Serve as the ‘Glue’ for Advanced Digital Business Applications.” It goes on to say that the ability to integrate multiple applications, data types and data sources in a secure, predictable, lower-latency fashion will spell the difference between digital business success and failure.”
Equinix agrees. The most effective companies in the future – in the insurance sector and elsewhere – will be those that are the best connected. And many of them will be using Platform Equinix, which offers the widest network-neutral footprint.
Big challenges, bigger opportunities
The opportunities for the insurance industry in China are matched only by the size of the challenges. Technology has long been an inherent differentiator, however, information management and connectivity is becoming a critical factor.
What we are seeing is a new stage of development within the insurance industry, where high volume data sets are stored, processed and analyzed in real-time. The full underlying potential can be unlocked with the application of new modelling technology. China’s insurance landscape is recognizing that the merger between technology and daily operations are a key competitive advantage. Indeed, obtaining actionable intelligence from large data sets could well be the difference between being competitive and being left behind.
Article by James Maudslay, Equinix blog network