Shorter claim times and tailored policies are two potential benefits arising from the use of Big Data, according to a report commissioned by MLC Life Insurance and the Financial Services Council.

Big Data may also reduce application times and lower premiums, the report from research house EY Sweeney says.

MLC Life CEO David Hackett says the life insurance industry lags behind others in this area.

“There is enough evidence from other industries, such as healthcare and technology, to show customers are getting better service and products,” he says.

Mr Hackett concedes there much still to learn about Big Data and how to use it, but the industry should act.

“Now is the time for our industry to invest in it, to innovate practices where customer experience has perhaps been suboptimal in recent times, particularly about the processing of claims.”

The report examines opportunities and challenges around Big Data in the life industry.

It says Big Data will let life insurers learn more about their customers’ buying habits and lifestyles, enabling products to be tailored to their needs.

Increased knowledge will lead to less annual administration when handling claims or updating polices, Mr Hackett says.

“Life insurers will be able to gain a more complete picture of a customer’s situation, increasing the accuracy of risk assessments and pricing decisions,” he said.

“More accurate pricing could make customers better off, particularly those shown to be less likely to make a claim… Big Data should also reveal more accurately where the bulk of claims are coming from.”