During the recent Global Insurance Symposium held in Des Moines, insurance regulators from more than 15 states took “a significant dive” into the use of big data and analytics in the U.S. insurance industry, through hands-on regulator-only training sessions hosted by the Iowa Insurance Division. 

“We have a large number of our staff participating to really fully understand some of the modeling that is occurring in the world of insurance now,” Iowa Insurance Commissioner Doug Ommen told me last week. “And as part of that, we invited other states to join us. … As regulators, it’s our responsibility to understand fully [the technology] that’s being used.” 

At the national level, Ommen heads the Big Data Working Group of the National Association of Insurance Commissioners, which is working to assess needed changes to state laws, provide ways for state regulators to share resources, and assess data needs to monitor the market as the use of predictive analytics expands. 

The type of predictive-analytics applications that insurtech companies are developing for insurers is bringing to reality new products that were heady futuristic stuff just a few years ago,  Ommen said. 

For instance, some insurtech apps enable insurers to use facial recognition technology to predict mortality rates by scanning various features on an individual’s face. Other companies are plugging data into algorithms examining such things as consumer purchasing habits of potential policyholders, what they eat and the prescription drugs they take. “It’s just mountains of data that insurance companies are collecting, or have access to, that can be used in these algorithms,” he said. 

Ommen said he has observed a significant shift over the past two years in the way that insurance companies are using data. 

“So as the people working here in the insurance division, we need to really understand and grapple with that, and also evaluate those correlations to make sure that what it is happening is consistent with our laws of fair treatment of risk — the insurance concept based on the principle that people that have similar risks will be paying similar rates.” 

To facilitate the training, the insurance division brought in Dorothy Andrews, chief behavioral data scientist with Insurance Strategies Consulting in West Des Moines, who currently works with insurtech companies in building predictive behavioral models. 

“Frankly, I expect there will be experts with different perspectives from other states participating in that training as well,” Ommen said last week. “And we all improve by listening to each other.”State regulators gather during insurance symposium for big-data learning