Sunday, August 03, 2014

Big Data Killer App - Usage Based Insurance

Larry Ellison compares IT and fashion industries, saying that IT industry's most frequent product is .. bunch of synonyms ( fashion industry often just slaps new names on old products, and so does IT ).
Many IT buzzwords fizzled so nobody should be surprised when some good ideas and concepts are doubted. Big Data is definitely one of them, and although some industry analysts think Big Data is going down and out, hardly a day goes by without related article in mainstream business press and IT related publications.

Perhaps best way to describe Big Data is by example. I chose car usage based insurance industry revolution, which is partially enabled by Big Data. It is now possible to effectively collect and analyze actual driving data and adjust insurance premium accordingly. Usage Based Insurance is relatively old concept dating back to early 90s, but more recent technological developments made it a mandatory part of insurer activities. An example of a simple UBI implementation is Progressive Insurance Snapshot product which collects and sends ( via car onboard diagnostics port attached dongle ) basic driving information ( hard braking, distance driven ) over to  Progressive, so it can more accurately determine driver's risk profile.

Why is UBI Big Data application ? Amount of data generated can be staggering - even basic information like time of day, car location, acceleration, speed can easily amount to 10 MB per customer per year, which equals to 1TB of data for just 100,000 customers. This data also comes at high rate ( velocity in Big Data definition ) and advanced ( predictive ) analytics is needed to accurately determine driver's risk profile. It is also possible to provide real time analysis of driver's data, compare current speed with maps containing speed limits and provide immediate feedback to the driver.  UBI mandates  rethinking of architecture and tools to be able to effectively collect and analyze driving data.

No comments: