INDUSTRY BRIEF

Digital Transformation in Insurance Powered by Big Data

Introduction Digital Capabilities
Insurance has the opportunity to leapfrog the other segments of Financial Insurers need to develop capabilities in four main areas:
Services into the digital era. One thing in favor of this opportunity is the advent • Customer insights: create a 360-degree view from multiple sources:
of wearables and sensors, or the Internet of Things (IoT), but they are just policy and claims, telematics, social media, website traffic, clickstream,
the enablers. The big driver for change in insurance are the customers: the GPS, call center, email, chat, etc.
digitally native Gen Y and the affluent. In a recent survey by Capgemini and
• Improve products and services: Insurance companies will need to improve
Efma, almost half of customers indicated that they would buy insurance from
quality of service and at the same time reduce the cost to serve. IoT is
a non-insurance company. That is a powerful force for change in insurance.
also driving a fundamental change in how insurance companies can use
47% of customers are likely to buy insurance from non-traditional sensor data to create and improve products as well as services— especially
insurance firms for Usage-Based Insurance (UBI).
23% of Gen Y customers • Lower business risk: new digital channels add new vulnerabilities.
Insurers need to expand their fraud prevention and cyber security
31% of affluent customer
capabilities to cover more sophisticated, digital threats. For example,
Source: Capgemini and Efma World of Insurance 2016
identify key patterns from free-form text, combined with GPS data, in
The sensors that make the IoT are being embedded in everything around real-time, to detect and prevent claim fraud. Many cyber attacks do
us—smart homes, buildings, cars, appliances, wearable devices like watches, not conform to existing patterns, so it’s important to be able to have
heart monitors etc. They can collect and transmit data that can be used to a comprehensive baseline of network data and log data to detect
improve our lives and our health. For insurers, this brings a new and rich exceptions and Advanced Persistent Threats (APT).
set of data that could be used for personalized risk assessment, dynamic • Modernize IT architecture: in order to support the new business goals
pricing, and developing new types of services. enumerated above, insurers need to take advantage of new and untapped
data sources—especially unstructured data—through modernizing their
Imagine a pipe bursting in your apartment while you are away. Your smart
architecture based on big data technologies.
monitoring system, which includes smoke detection, burglar alarm, and
water sensors, sends an alert to your monitoring service. They have been Cloudera can help in all these areas by providing an Enterprise Data Hub
recommended by your insurance broker to lower your premiums. They are (EDH) as the foundation for consolidated data management. EDH makes
part of a connected ecosystem of your insurance provider. They have a list all types of data available for analysis, in real-time, at Petabytes-scale.
of approved plumbers in your area, they send you a quote to your phone,
you approve it with a tap on the screen. By the time you are home, everything Customer Insights and Usage-Based Insurance
is back to normal, because the damage was minimal and your cleaning
Traditional insurers, who have historically competed on general pricing
service was alerted to come in right after the plumber.
or via broad, expensive marketing campaigns, want to differentiate their
Now, that’s an experience that can create loyalty and motivate customers coverage options by customizing plans based on information collected
to buy more services. The opportunities are endless and ever-evolving. about the individual’s lifestyle, health patterns, habits, and preferences.

Let’s talk about one of Cloudera’s key customers—a large, US-based

InsurTech Examples insurance provider. This insurer has more than 80 years of policy data.
Insurance may be the new frontier for FinTech startups, which some call From a business perspective, the insurer wanted to create a 360-degree
InsurTech. They are driving innovation with services that are simple, intuitive, view of their customers and be able to analyze all of the data, current
fast, convenient, and are delivered through digital channels. In the health and historical, across all 50 states.
insurance space, Oscar offers a better customer experience using technology
and design. Car insurance Metromile innovated by selling “pay-per-mile” As the insurer began to transition its historical and current policy data into
policies. Marmalade in the UK is able to offer cheaper insurance for new online records and attempt to run programs that correlated such external
drivers by using telematics to assess risk and to influence driver behavior. data as traffic patterns, socioeconomic studies, and weather information,
the IT department found that the systems would not scale to process such
In the life insurance space, a new trend is to sell “episodic” or “just-in-time” volume of data and the variety of formats from diverse sources.
insurance. Sure offers on-demand travel insurance that lasts from take-off
until landing. You can use their app to apply while you wait for the plane to For instance, they could look at data from a single U.S. state at a time—
board and the underwriting takes seconds. with each state’s analysis requiring about a day to process—but could
not run analytics on all 50 states at once. Although new data systems
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 INDUSTRY BRIEF

were being put in place to capture and prepare data for reporting and Lower Business Risk
business intelligence, they were primarily aligned to marginally improve When you consolidate all your data into an Enterprise Data Hub, it’s important
on old approaches to data management, which separated data types and to secure it, protect it, partition it and be able to perform audits and searches.
workloads into distinct silos.
Cloudera’s solution offers enterprise-grade data security and governance
With a first technical objective of speeding up processing times and at Petabytes-scale for your Hadoop environment.
consolidating its disparate data sets to achieve more scalable analytics,
this leading insurance company built an Enterprise Data Hub with Cloudera Cloudera Navigator is the first fully integrated data security and governance
Enterprise. Its centralized Hadoop implementation spans every system application for Hadoop-based systems. It provides data lineage and
across the entire company to break down data silos and provide a single, discoverability and policy-based management of sensitive data.
comprehensive view of all its data. Cloudera Navigator encrypts data at rest and in motion and, with its Navigator
The three main technical cases for adopting Hadoop were flexible and Key Trustee Server, encryption keys are separated from the encrypted
active data storage, integrated and efficient ETL, and applied statistics data—ensuring that sensitive data is still protected if unauthorized users
and computation. gain access to the storage media.

The insurer brought together customer account information, public This feature is also useful in a hybrid cloud scenario, where part of your
economic and social studies, and telemetric sensor data in its initial data may reside in a cloud provider data center.
Hadoop cluster. Some of these data sources had never been brought The Enterprise Data Hub can be used to improve the effectiveness of
together before, and much of the historical data, which was newly security and fraud prevention analytics. Traditional technologies have
digitized, could not be analyzed in tandem with external sources prior limitations in the volume and type of data they can process. With Hadoop,
to landing in Hadoop. you can perform multi-year analysis that spans multiple data types, which
Today, the company’s Enterprise Data Hub is integrated with its incumbent can detect persistent threat algorithms or sophisticated fraud patterns.
mainframes and data warehouses—it was designed specifically to complement, A major US insurer is using Cloudera Enterprise to analyze 60 years of
not replace, existing infrastructure. claims data, combined with adjusters’ notes and social media content to
Now that it can run descriptive models across historical data from all 50 states detect fraudulent patterns in real-time.
using Apache Hive—open-source software that makes transformation and Markerstudy, a European insurer, saw a 50% increase in customer retention,
analysis of complex, multi-structured data scalable in Hadoop—the insurer doubled policies issued in 18 months, and can analyze tens of millions of
is experiencing an average 7500% speed-up on analytics and seeing even quotes in under a minute. This leads to a £5 million claim cost reduction
better results with Impala. through fraud prevention.
Unburdened by data silos, its analysts and data scientists are building predictive
models that help the business customize products that are better aligned to About Cloudera
the individual behaviors and risks of each customer, tune pricing of insurance Cloudera delivers the modern platform for data management and analytics.
plans more precisely to maximize lifetime value, and develop differentiated The world’s leading organizations trust Cloudera to help solve their most
marketing offers that communicate value for the most appropriate cross- challenging business problems with Cloudera Enterprise, the fastest, easiest,
sell and up-sell opportunities without diminishing margins. and most secure data platform built on Apache Hadoop. Our customers
can efficiently capture, store, process, and analyze vast amounts of data,
Another positive outcome was the development of a Usage-Based Insurance
empowering them to use advanced analytics to drive business decisions
offering. By tapping into the sensor data from 1 Million connected cars,
quickly, flexibly, and at lower cost than has been possible before. To ensure
combined with policy and claim data, they are able to understand risk
our customers are successful, we offer comprehensive support, training,
and incentivize drivers at an individual level.
and professional services. Learn more at cloudera.com.

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