In order for insurance companies to readily make use of a wide variety of data points, however, it is necessary for them to be able to both find and purchase new data sets, as well as to have streamlined mechanisms for integrating each new data set with the others.

Unification & the end of data silos

Unification provides just such an opportunity for insurance companies to acquire the data sets necessary to improving the efficacy of their product.

In the third article of our series “Why Unified Data is Inevitable,” the Unification team dove into the methods that Unification is using to exchange new data sets more efficiently than was ever before possible.

Unification offers a two-pronged approach to support companies in utilizing data to improve customer experience:

HAIKU, Unification’s C++-based smart contract protocol, seamlessly standardizes data sets within a wide variety of markers into a singular, unified format, making it easier for data sets from many different sources to be correlated against one another. BABEL, Unification’s user interface, offers a data marketplace for standardized data, where companies can both buy and sell data sets within the unified data format.

With Unification, insurance companies are able to acquire the data that they need to make better prediction algorithms and to incorporate it with very minimal human effort, skyrocketing their ability to more accurately predict risk and offer fairer rates to consumers.

The individualization of insurance

At present, insurance companies are already targeting customers based on personal characteristics, offering them better pricing if they can prove factors that lead to better outcomes, like their level of fitness (as shown in the ad below for Health IQ, for example.)

Example of individualized insurance rates: Health IQ offers life insurance at a discounted rate to customers who can run a nine-minute mile.

There are also a number of auto insurance companies utilizing individualized data to better price car insurance.

Metromile offers users a pay-per-mile model, while Drivewise by Allstate and Snapshot by Progressive incentivize users to attach a data-collection device to their vehicles and reward them for low-risk driving habits.

Certainly, personalized quotes based on individualized factors are where the future of insurance is heading, but several problems still exist.

At the moment, much of this data is self-reported with huge inefficiencies and possibility for error. Additionally, data collection often requires installation of proprietary devices that can’t be easily correlated with data collected by, say, a user’s smartphone or FitBit.

For instance, once someone tells Health IQ about their nine-minute mile, how can the insurance company verify without a shadow of a doubt that the information reported is accurate, and that they won’t abandon their runner’s lifestyle the next day and start indulging in daily Netflix and cheeseburgers instead?

How Unification affects the insurance industry

Unification can help to solve the myriad of challenges listed above in two ways:

Better data access: We enable the insurance company to acquire verified, accurate data from other apps that are collecting personal information that may be useful in risk assessment. Dynamic contracts: We future-proof rates agreements so that as a user changes their lifestyle, their insurance rates are automatically updated accordingly.

Better data means more accurate rate assessments

Until recently, most data acquired by insurance companies was self-reported or at best a snapshot, prone to inaccuracy and unable to shift dynamically with changing conditions.

With Unification, insurance companies can purchase more robust data sets directly from other enterprises, ensuring up-to-date accuracy while respecting the privacy of the user themselves.

Example: Life Insurance

In the example of life insurance, Unification allows insurance companies to acquire data that helps them more accurately predict the likelihood that a given customer will die during the term of a policy, via health and other predictors.

There are several factors that make this a better choice for both insurance companies and end users, including:

Data provides real proof

To take the above life insurance example, using Unification’s BABEL interface, an end user can provide proof that they can indeed run a nine-minute mile by consenting to share their Strava, Fitbit, and/or Google Health records with their insurance company.

Rates can correspond with risk

In real time, their life insurance company can adjust their rate to accommodate the fact that they have a significantly lower chance of dying than someone who takes twenty minutes to run a mile.

Better rates for users

The end user not only gets rewarded with UND, Unification’s utility token, for opting into the information sharing, they also save money because they are able to purchase a cheaper insurance policy than the one they were previously offered.

Real-time rate adjustment

Additionally, because data is being collected continuously, the insurance company is able to keep updating the policy rate in real time, further lowering costs if the customer continues to do more exercise. Instead of being locked into an annual rate that doesn’t reflect changing lifestyle choices, users are actually incentivized to change their behavior in the short term to produce better health outcomes.

Better sales pipeline

On the business’s side, with Unification, they now have access to a system that allows them to guarantee accurate assessments of risk profiles over the long term, while also being able to access data that could inform them of other products a customer might be interested. For example, if they purchase GPS data about a customer and discover that that person spends a significant amount of time traveling, they can offer to sell that user travel insurance as well.

Example: Auto Insurance

In the example of auto insurance, Unification enables insurance companies to gather data from multiple data sources in real time that allows them to properly calculate the risk of each driver, setting dynamic insurance rates that shift with risk.

This is a better choice for both insurance companies and end users for several reasons, including:

User compensation for data sharing

Within Unification’s BABEL dashboard, the end user themselves elects to share their driving records and related data (such as education level, community affiliations, professions, or distance from office) with their insurance company. If they already use a tracker on their car from a service like Metromile, Drivewise, or Snapshot, then they can offer this data to their insurance company directly through BABEL. They are compensated with UND for authorizing the exchange.

Access to more robust data sets

The insurance company is able to then take these multiple data sets and correlate them to produce a far more accurate and up-to-date assessment of their risk profile, so they can set rates accordingly. Safer drivers who present lower risk have this fact borne out via the data, leading to lower car insurance rates overall.

Rates can update dynamically

The beauty of this system is the ability for rates to maintain a high degree of flexibility relative to the actual risks presented by insuring a specific user. Data tracking, as authorized by the user, can continue in perpetuity, allowing the rate to reflect real-life changes in a driver’s situation, so they’re never paying for insurance that they’re not using.

Users maintain control

Meanwhile, the keys to the data exchange remain firmly in the users’ hands, so if at any time a user wishes to stop data exchange with their insurance, they are able to do so with a click (knowing that it may affect their ability to access the best rate).