Insurance companies normally place artificial intelligence, the Internet of Things and big data into individual buckets. Yet, chief information officers should invest in all three at once, according to new research from Novarica, as they are equally dependent on each other for best results.

In an executive brief, “Big data, IoT and AI Maturity levels,” the consulting firm argues that while AI is the next stage of advanced analytics decision making, big data and IoT—in the form of sensors, drones and wearables—feed machine learning platforms the information needed to help insurers make smarter claims and underwriting decisions.

“All three of these emerging technologies are tightly intertwined. In fact, it’s difficult to recognize the future value of one without the others,” said Jeff Goldberg, SVP of research and consulting at Novarica, the study’s author.

The report also lays out common industry approaches to each tool. As an example, more insurers are investing in unstructured data environments to store, maintain and manipulate customer information, Novarica notes.

Carriers opposed to building new data environments from scratch, due to complexity, are relying on third-party vendors for insights on customers. This data can include driving behavior for “driver scores” and physical activity from wearables. To be sure, the approach does not mean selected carriers have the necessary big data capabilities to process all this information, Goldberg says. The good news is they don’t need to.

What’s happening is that these insurers are pulling the key metrics from an IoT data stream and loading it into a traditional relational database,” he says. “This isn’t a new approach; insurers have been doing this for a long time with many types of data sets.”

Finally, AI is leveraged by insurers to augment human decisions, automate business processes and to resolve customer inquiries with as little data needed as possible. Goldberg says that together AI, IoT and big data can improve three key factors in decision making—the quality of a decision, time needed and the data used to make it.

“Any company that focuses on only one of these technologies will find its use of the technology and the value it provides for the future limited,” he writes. “However, this does not mean an organization must become an expert overnight.”

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