When 80% is irrelevant: sorting wheat from chaff key to data management

In a world of ever-burgeoning data and information, an increasingly important metric for insurers is how to sift the wheat from the chaff and identify what’s important and what’s not, according to Marc Beckers, head of ReSolutions EMEA at Aon Benfield.

“An interesting thing about data is that 90 percent of all data available today in the global economy has been collected in the last two years,” Beckers told Baden-Baden Today. “That’s a statistic to shake you up.”

The rapid increase in the amount of data being collected from multiple sources is also still rapidly accelerating, with more devices being connected to the internet, information stored in the cloud, and challenges such as how best to insure driverless cars coming down the line.

However, Beckers said, just because information is available, that does not necessarily mean that it is needed, or useful in any way.

“A lot of that data is not very useful. The question is: what data is really useful for our clients? We need to focus on the right data for our clients, not irrelevant statistics.

“That’s the challenge we have now: identifying the key data that is most beneficial. If we look at 100 percent of the data that exists in the global economy, we can probably say that 80 percent is not relevant, aka the 80:20 rule.

“We have to focus on the 20 percent—how can we use that to change the market?”

Beckers added that this is an area of special interest for Aon, which now has two centres of innovation in Dublin and Singapore that, among other things, look at the issue of the best way to winnow out the relevant data from the irrelevant. At present, Aon Benfield spends around $140 million a year on analytics.

“There are a lot of tools being developed for that process to make it smoother and I am absolutely convinced that in the next five years we’re going to see a lot of changes in how the re/insurance market will work,” Beckers said.

“Does that mean that what we are doing today won’t be relevant in five years’ time? No. There is a lot of inertia, so it will take time. There will be evolution, there will be areas that will start being done in a different way.

“The challenge for us as an industry is almost the same as when Nokia had around 50 percent market share of the cellphone market. They looked at Apple and said ‘we’re not afraid of Apple, they’re a computer company, not a mobile phone company’.

“Then they saw that people were willing to queue to buy a product that was about 10 times more expensive than their mobile phone and realised they’d missed that boat.

“We need to look into our industry because that can happen in every sector. What are the new trends and how do we cope with them? How can we benefit from using the new information?”