In the dynamic landscape of the insurance industry, a recent study published in The Journal of Finance and Data Science highlights the profound impact of technology, particularly big data, on the sector’s staggering USD 6 trillion global revenue in 2022, surpassing the entire economies of major countries like Japan and Germany.
Conducted by Nejla Ellili, the first author of the study, the research delves into the transformative role of big data in reshaping how insurance companies operate. The study underscores that leveraging big data enables insurers to gain a deeper understanding of risks, provide equitable pricing, and enhance overall customer satisfaction.
Ellili notes the swift adoption of big data by insurance companies, emphasizing a substantial investment of approximately $3.6 billion by 2021. The return on this investment has proven substantial, with big data contributing to cost savings, improved insurance offerings, and increased fraud detection.
Despite the evident benefits, the study sheds light on critical challenges associated with the use of big data in the insurance sector. Privacy and ethical considerations emerge as key concerns, urging a cautious approach to the vast amounts of data being utilized. The study underscores the importance of ongoing research to comprehensively understand the long-term implications of big data in insurance.
“While big data has undeniably bolstered the current state of the insurance industry, ethical considerations and privacy issues must be addressed,” warns Ellili. The study serves as a roadmap for future research, guiding researchers and policymakers in identifying areas that require further exploration to ensure responsible and ethical use of big data in the insurance domain. The findings emphasize the need for continuous scrutiny and adaptation of insurance regulations to align with the evolving technological landscape.
