The Internet of Things will connect 40 billion devices by 2020. Many will be installed in homes and cars, emitting vast amounts of data all ready to be fed into insurance companies’ underwriting models.
So what type of data will be most important to insurers? A major trigger that sets people to thinking about their financial needs is life events. In the United States, there are 2 million weddings every year, 4 million babies are born, 18 million new cars are sold. At Google, we operate seven properties that have more than a billion users and we’re able to gather signals from people going through these life events and categorize them. Insurance carriers are going to be able to use this kind of taxonomy to target and personalize their online advertising.
We’ve already seen great results from campaigns targeting people in the midst of these life events, in terms of increasing the number of people who subsequently look for particular brands. It’s a good example of how data that’s newly available—or newly put together—can make for more effective messaging to the right kind of people, as opposed to just aiming at adults who are 18 to 49 years old.
Looking further ahead, the conversation will be around what machine learning can do for us. We’re moving from computer science, where computer coders write very explicit, line-by-line instructions, toward starting to train machines to look for information that could be valuable.
Say you want to teach a neural network to recognize, for example, cats. It used to be that you’d say, cats have fur, they have pointy ears, they have a tail, and they have whiskers. With machine learning, you could just basically say, I want to teach this neural network to recognize a cat, and send it thousands and thousands of pictures of cats. And over time, you will help that neural network to start to recognize what a cat is.
Insurance companies are in a good position to handle the onslaught of data because they already know how to operate large amounts of it. But it is important that they use it to write better business. They also need to think about how customers want to be interacted with and what they need to do to increase customer satisfaction. Currently, in the United States, between 80 and 90 percent of people research financial services online. But for the most part, they buy offline. So that 80 to 90 percent is up for grabs.
And companies need to commit to speed. Insurance is a highly regulated industry and it is not easy to move quickly—but the fact is consumers are moving at exceptional rates. So I’d say that the companies that will stand out are the ones that are going to find ways to move a bit faster, at the pace of the people they’re insuring.