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1.       Create more accurate risk profiles for more accurate pricing.

P&C carriers typically rely on historical analyses. Code halos provide higher levels of accuracy by incorporating real-time data on weather and geopolitical issues that had previously been difficult to track. Now carriers can track risk as it changes over time.

P&C carriers underwriting crops in the Midwest traditionally relied on a patchwork of sources. Now, hyper-local data can bring new levels of detail to the carrier's underwriting. Today's crops are smart fields, in that they generate a steady flow of information about themselves. By coupling field data with aggregated weather data, the carrier produces a more refined prediction of risk and loss. 

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2.       Uncover new exposures to drive increased sales.

Call centers have long had access to data on customers' cars and homes. They can now access additional details via each customer's code halo, driven by social networks, digital footprints, and agency interaction—and unlock buying potential.

As a result, P&C call centers can proactively recommend product mixes that best serve customers' needs. Family milestones, such as a teenager getting a driver's license or adopting a puppy, signal opportunities for carriers to discuss managing new exposures.

In the sharing economy, agents are the insurers' frontlines. They conduct outreach via social media platforms and make the interpersonal connections that carriers can't. The agent intermediary provides the hyper-personalized, one-on-one relationship that customers demand. Imagine a carrier's catastrophe response if its agents are following the customers on Twitter. Viewing real-time images, seeing the impact, and responding quickly to the hardest hit areas plays a dual role for carriers: serving customers in times of need and increasing customer retention and satisfaction. 

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3. Invest in predictive analytics to optimize pricing strategies and drive increased profit within the existing business.

Traditional data provides insight into the past; predictive analytics looks forward. By dovetailing analytics with the code halos of smart homes, P&C carriers can predict more accurate failure rates for the appliances they cover with extended warranties.

The Internet of Things (IoT) and its data is a growing reality. Consumers are increasingly installing IP-connected thermostats, lightbulbs, and home security systems. Acquity Group estimates 69% of consumers plan to buy an in-home IoT device over the next five years. Soon, refrigerators will create code halos—this fall, GE Café will begin selling a refrigerator with a built-in Keurig coffeemaker that users can control with their smartphones.

Tapping into this data – the devices' code halos – can offer insight on the performance of appliances. Heat and ambient temperature, for example, could affect components or indicate failures. P&C carriers now have a warranty business that can chat with them, and this increased security and safety create a tremendous amount of value with customers.

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4. Make smarter underwriting decisions to reduce costs and make more competitive offers.

Digital data is a game-changer for underwriting criteria. Carriers can organize information faster to better mitigate risk and improve the quality of their decision-making.

Take the example of a commercial property insurer that underwrites chemical processing plants. Its central exposure is in the Midwest and New Jersey. To strike optimal capacity, it needs to blend as much exposure as possible into other parts of the country. Using code halos, the carrier can layer the aggregate amount of exposure within certain areas, plot its risk, and then actively map it in terms of loss prevention and control. Code halos for the chemical processing plants can include smart building attributes such as power consumption, security cameras, and door and window sensors. By creating a multidimensional view of the building and its risk, the insurer can access point-in-time checks for loss prevention audits.

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5. Sharpen your loss prevention strategies to improve accountability and reduce overall risk.

Digital data drives new methods for prediction and prevention. Technology is putting a rapidly changing spin on loss prevention, sometimes literally. When Boston rooftops collapsed under record snowfall in February, the city of Somerville turned to drones to examine building roofs at risk of collapse and inaccessible to inspectors.

Rapid innovations in the technology space, from smart fields and smart homes to wearables, are forcing rapid change upon the insurance industry. By leveraging code halos created by each customer, insurance companies can offer better, smarter, and more personalized service – simultaneously driving growth and profit while bolstering customer satisfaction.

Michael Clifton is leading the emerging business group within Cognizant's insurance practice to bring innovative solutions to market. He is known as a senior leader and strategist with broad expertise in assessing operations and business challenges, developing strategies, and delivering results.