The article further emphasizes the "butterfly effect" of data purchases, where a minor action can have a significant impact on a larger, more complex system. It gives an example of how a minor undiscovered change in the data lake of a third-party provider could affect auto insurance pricing, leading to significant consequences for consumers. The article concludes by encouraging insurers to set the standard for quality data and data vendor monitoring best practices that power responsible, innovative AI products and services.
Key takeaways:
- Insurers often purchase third-party data to build their products, but this data can be inaccurate and biased, leading to subpar products and services.
- Insurers need to evaluate the data sources, analytics processes, and data security controls of third-party data vendors to ensure quality information and avoid consumer lawsuits and regulatory fines.
- The insurance industry is on the verge of a butterfly effect, where minor inaccuracies in data can have significant impacts on the entire insurance distribution lifecycle and other areas of consumer life.
- Insurers are entering a new era of data modernization and must do more than follow once-trusted data-purchasing practices to maintain customer confidence and power responsible, innovative AI products and services.