AlternativeDataUsageinLifeandHealthInsurance|EvidencefromAustralia

October|2023

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Copyright?2023SocietyofActuariesResearchInstitute

AlternativeDataUsageinLifeandHealthInsurance|EvidencefromAustralia

AUTHORSZhanWang,FIAA,CERA

HanLi,PhD.,AIAA

SPONSORActuarialInnovationandTechnology

StrategicResearchProgramSteeringCommittee

CaveatandDisclaimer

TheopinionsexpressedandconclusionsreachedbytheauthorsaretheirownanddonotrepresentanyofficialpositionoropinionoftheSocietyof

ActuariesResearchInstitute,theSocietyofActuariesoritsmembers.TheSocietyofActuariesResearchInstitutemakesnorepresentationorwarrantytotheaccuracyoftheinformation.

Copyright?2023bytheSocietyofActuariesResearchInstitute.Allrightsreserved.

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Copyright?2023SocietyofActuariesResearchInstitute

CONTENTS

UseofthisReport 5

ExecutiveSummary 5

Section1:IntroductionandInterviewMethodology 7

Section2:MarketOverview 9

2.1TheAustralianLifeInsuranceMarket 9

2.1.1TypesofProductsAndDistributionChannels 9

2.1.2MarketShare 10

2.1.3RecentIndustryProfitability 11

2.2TheAustralianPrivateHealthInsuranceMarket 11

2.2.1TypesofProducts 13

2.2.2MarketShare 14

Section3:Participants’ProfessionalBackgrounds 15

Section4:InterviewResponses 17

4.1DefinitionandTypeofAlternativeData 17

4.2ApplicationofAlternativeData 17

4.3ConcernsandChallenges 19

Section5:CaseStudies 21

5.1NLPandUnstructuredData 21

5.1.1ClaimsData 21

5.1.2Personal-LevelFinancialData 22

5.1.3CustomerEngagementData 22

5.2HealthandWellbeingData 23

5.2.1PersonalIllnessDataandPre-existingHealthConditions 23

5.2.2DataCollectedfromWearableDevicesviaWellbeingPrograms 24

5.3SocialMedia/InternetData 24

5.4DatafromGovernmentAgencies(PublicNon-personalData) 25

5.4.1Traditional 25

5.4.2Non-traditional 27

5.5OtherDatasetsMentionedintheInterview 27

5.5.1Postcode-levelMortalityandMorbidityData 27

5.5.2ResearchReportbyActuarialProfessionalBodies,LargeGlobal(Re)insurersand

ConsultingCompanies 27

Section6:ScopeofAlternativeDataUsageinLifeandHealthInsurance 29

6.1ChangingLandscapeinDataandDataSharing 29

6.2RiskCharacteristicsandRegulatoryImplications 31

6.3MarketSentimentandManagementFocus 32

6.4AdditionalGovernanceandEthicsConsiderations 33

Section7:Conclusion 34

7.1SummariesofKeyResults 34

7.2Limitations 34

Section8:AuthorsandAcknowledgments 35

8.1Authors 35

8.2Acknowledgement 35

AppendixA:InterviewQuestions 36

A.1PrimaryQuestions 36

A.2AdditionalQuestions(SelectedParticipantsOnly) 37

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AboutTheSocietyofActuariesResearchInstitute..................................................................................................39

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Copyright?2023SocietyofActuariesResearchInstitute

AlternativeDataUseinLifeandHealthInsurance|EvidencefromAustralia

UseofthisReport

Thecommentsandviewspresentedinthisreportaresummarizedfromtheinterviewsanddonotnecessarilyrepresenttheviewsoftheorganizationsforwhomtheparticipantswork.Itisimportanttonotethatthese

commentshavenotbeenverifiedbytheresearchers,andnotallcommentsfromtheinterviewsareincludedinthisreport.

“Inthereport,quotesfromtheparticipantsareshowninthisformat.”

ExecutiveSummary

Alternativedatasourcesbeyondpolicyin-forcedataandclaimsdataareincreasinglyseenasavaluableresourceforlifeandhealthinsurance.Thesenon-traditionaldatasourcescanhaveadvantagesdueto,amongotherfactors,thespeedofdatacollection,increaseddataaccuracyandgranularity,andtheprovisionofinformationonlifestyleandbehavioralcharacteristics.However,suchdatasourcesmustbecarefullyevaluatedtoascertainifthebenefits

outweighthecostsandbyhowmuch.Thisresearchutilizedaninterview-basedapproachthatdelvesintotheutilizationofalternativedataintheAustralianlifeandhealthinsurancemarkets.

Toprovidecontextfortheinterviewsthattookplace,weexplainedthekeyelementsoftheAustralianlifeand

healthinsurancemarkets,alongwithproductcharacteristics.Keyobservationsincludedtightregulations,limitedrangeofproducts,concentratedmarketshare,andindustrysustainabilityconcernsinrecenttimes.

Drawingfromone-on-oneinterviewsconductedwith20experiencedpractitionersinthefield,wepresenta

comprehensiveoverviewofcommonlyusedalternativedatasetscategorizedintofivemaingroupswithdetailedexplanationsonsomehighlightedcasestudies.Furthermore,weengagedindiscussionsregardingtheviewpointscollected,coveringpotentialopportunities,existingchallenges,andthefutureprospectsofalternativedatausagewithintheAustralianinsuranceindustry.

Wedrawthefollowingconclusionsbasedontheinterviewresponses:

?Publicnon-personaldataarethemostuseddatasetsbypractitionersintheAustralianlifeandhealthinsurancesectors,althoughthereisatendencyandwillingnesstoalsoutilizenon-publicpersonaldata.

?Theobjectivesofusingalternativedataincludecustomerengagementandinteraction,productdevelopment,experiencemonitoring,segmentationanalysis,andcompetitoranalysis.

?Besidesdataavailability,otherkeychallengesinusingalternativedataencompassmanagementresourceconstraintsandalackofacomprehensiveframeworkforutilizingalternativedata.

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Whileacknowledgingthatthedevelopmentofalternativedatausagemighttranspiregraduallyovertime,weareenthusiasticaboutwitnessingthecollaborationoftheAustralianinsurancesectorasawholetoharnessthepowerofdataforthegreatergoodofsociety.Someofthekeytakeawaysfromthisresearcharesummarizedbelow:

?Thechanginglandscapeindataanddatasharingisinevitable,andthishaspotentialtoimprovetheinsuranceindustryforboththeinsurersandpolicyholders.

?Thedevelopmentofalternativedatausagemayoccurgraduallyandincrementallythroughtrialanderror.

?Thereshouldbeasecuresysteminplacetohandlecommerciallysensitiveinformationandensuretheprivacyandsecurityofthedata.

?Itiscrucialfortheinsuranceindustrytocollaborateandharnessthepowerofdataforthegreatergoodofsociety,ensuringthatdataareusedethicallyandresponsibly,respectingtheprivacyandrightsof

individuals,andprotectingvulnerablesegmentsofthepopulation..

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Section1:IntroductionandInterviewMethodology

InAustralia,thelifeandhealthinsuranceindustrieshavebeenpredominantlyrelyingonpolicyin-forceandclaimsdataformanydecades.Thesedatasetsprovideusefulinsightstothecharacteristicsandexperienceoftheinsuredpopulation,whichareimportantinputintounderwriting,pricing,andprofitabilitymanagement.However,therearecertainlimitationstothesedatasets,including:

?Infrequentdatacollectionpoints:mostdataarecollectedatpolicycommencementand/orattimeof

claims.ThisisespeciallythecasewithYearlyRenewablelifeinsurancepolicies.Changesinpolicyholders’circumstancesarenotupdatedfrequentlyinthedatasets.

?Lowdataquality:lifeandhealthinsurancedataareoftencollectedinanadhocandunstructuredmanner,forexample,claimsdatamayincludemultipleinterviews(bothinpersonandoverthephone),lengthycasenotesandunstructuredtexts,whicharedifficulttoanalyzeanddrawinsightsfrom.

?Limitedinformationaboutothercharacteristics:traditionaldatasetscontaininformationrelevanttolifeandhealthinsurancepolicies,whilelittleisknown,forexample,aboutpolicyholders’lifestyleand

behavioralcharacteristics.

Accesstoaccurateandtimelydataisvitalfortheinsuranceindustry.Withthehelpoftechnologicaladvancement,alternativedatahasbeenusedincreasinglyintheinsuranceindustry,especiallyinGeneralInsurance.InAustralia,

forexample,someautoinsurancecompaniesareactivelypromotingpricingfactorsbasedonawiderrangeof

individualcharacteristicsandthewaypeopleusingtheircar(seeyoui

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,“InsuranceforIndividuals”).Lifeandhealthinsurancecompanieshavealsostartedtoexplorethisfieldinrecentyears.Lifeinsurersarelookingtouseelectronichealthrecords,biometrics,andgenomicstoreplaceorsupplementthedatacollectedinthetraditionalunderwritingprocess.Recently,theuseofthesealternativedatasetshasbeenacceleratedduetogovernmentlockdown

measuresimposedduringtheCOVID-19pandemic.Insurersalsointroducedcomplimentarywellnessprogramstosupportpolicyholders’wellbeing,throughwhichfitnessandotherlifestyleinformationcouldbetrackedand

collected(seeAIAVitality

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andMLConTrack

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asexamples).

Whileitisevidentthatcertainalternativedatasetscanimproveinsurancepricingandunderwritingprocessand

improvecustomerexperience,theuseofalternativedataisstillanemergingfieldforlifeandhealthinsurers.TaketheAustralianlifeinsuranceindustryasanexample.Mostinsurersonlyrecentlystartedinvestingindatawarehouseandanalyticaltools.Moreover,utilizingalternativedatagenerallycomesataprice:besidespotentialdataquality

issues,therearealsoprivacyandethicalconcernsinvolvedwithalternativedata.Moreover,theriskandpotentialcostsofadatabreacharesignificantandcouldimpactfuturefranchisevalue.Thecollection,processing,and

analysisofdatamayalsorequireadditionalresourcesfromtheinsurancecompanies.Enhancementstothecostbenefitanalysisofsuchdatacouldbebeneficialtoidentifyandquantifyboththestrengthsandweaknessesof

differentalternativedatasets,andguideinsurersonwhetherandhowalternativedatashouldbeapplied.Forthisproject,weemployedaninterview-basedapproachtoexploreandevaluatedifferentalternativedatasetsusedinthelifeandhealthinsuranceindustries.

Forty-oneprofessionalsworkinginlifeinsuranceorhealthinsurancerelatedcompanieswerefirstapproachedthroughaninitialemailinvite,whichbrieflydescribedthecontext,purpose,andapproachofthisstudy.Furthercommunicationonmoredetailsofthestudywasprovided,and20participantsweresuccessfullyinterviewed.

1.au

2.au/en/individual/aia-vitality.html

3.au/about-us/media/mlc-life-insurance-launches-next-phase-of-award-winning-health-and-wellness-program

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Allintervieweeswerefurnishedwithaninterviewquestionnairepriortothescheduledinterviewforbetter

preparation.Interviewswereconductedeitherinpersonorviavirtualmeetings,eachtimewithoneparticipantandtwointerviewers.Interviewsstartedwithashortintroductionofthestudytorecapthepurposeanddeliverableofthestudy.Interviewees’responseswererecordedbyinterviewersandnoteswerelaterconsolidatedandsentto

intervieweesforconfirmation.Confirmedresponsesweresummarizedandanalyzedtodrawrelevantinsights.

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Section2:MarketOverview

Itisimportanttounderstandthecontextoftheinterviewsthattookplace.ThissectionexplainsthekeyelementsoftheAustralianlifeandhealthmarketslandscapeandproductcharacteristics.

ThelifeinsurancemarketinAustraliaisdominatedbyafewlargeinsurerswithalimitedrangeofproductsanddistributionmodels.Theindustryishighlyregulated.Inrecentyears,somesegmentsofthemarkethave

experiencedsubstantiallosses,leadingtosignificantmerger-and-acquisitionactivities.

WhiletherearemoreinsurersintheAustralianPrivateHealthinsurancemarket,themarketshareisalsodominatedbyafewlargeones.Theindustryistightlyregulatedbythe“communityrating”rule

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.Whileproductcoveragesarelargelysimilar,insurersintendtodistinguishthemselvesthroughdifferentdistributionchannelsandtargeted

marketingcampaigns.

2.1THEAUSTRALIANLIFEINSURANCEMARKET

2.1.1TYPESOFPRODUCTSANDDISTRIBUTIONCHANNELS

ThemainproductsofferedareYearlyRenewalTermpolicies,whichcoverrisksofdeath,disability,andcritical

illness.Theseproductscanbecategorizedinto“LumpSum”and“DisabilityIncome”benefits.“LumpSum”(LS)

benefitspayclaimsuponDeath,TotalandPermanentDisability(TPD),anddiagnosisofTraumaconditions(Trauma),while“DisabilityIncome”(DI)benefitprovidesaregularpaymentintheeventofeitherpermanentortemporary

disability.

Figure1

TOTALANNUALIZEDPREMIUMSINFORCEBREAKDOWNBYDISTRIBUTIONCHANNELANDPRODUCTTYPEASOFDECEMBER2022

AnnualPremiumBreakdown(AU$BN)

12.0

10.0

8.0

6.0

4.0

2.0

-

3.3

2.5

7.3

4.6

Individual

LumpSum

Group

DisabilityIncome

4Definitionofcommunityrating:Arulethatpreventshealthinsurersfromvaryingpremiumswithinageographicareabasedonage,gender,healthstatusorotherfactors.

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ThemaindistributionchannelsinAustraliacanbecategorizedinto“Individual”and“Group.”“Individual,”or

“Retail,”referstopoliciessoldthroughfinancialadvisersordirectmarketing,whilethe“Group”segmentconsistsmainlyofinsuranceofferedtomembersofsuperannuation(pension)funds.

AsofDecember2022,theAnnualizedPremiumInforce(API)wasmorethanAU$18billion,withAU$11billionforthe“Individual”segmentandAU$7billionforthe“Group”segment

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.ThesplitofAPIintoLSandDIisshownin

figure1.

Death,TPD,Trauma,andDIbenefitsareusuallyreferredtoas“RiskProducts”collectively.Whilethereareproductswithparticipationfeatures,theyaremostlyclosedbooksandnolongeropentonewbusiness.Annuityproductsarealsoavailable,however,theoverallcoverageislow.Therestofthissectionwillfocuson“RiskProducts.”

2.1.2MARKETSHARE

Thereare17registeredLifeInsurancecompanies,sevenReinsurancecompanies,andtenFriendlySocieties

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intheAustralianmarket

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.TheLifeInsuranceAct1995istheoverarchinglegislation,andtheindustryisregulatedbytheAustralianPrudentialRegulationAuthority(APRA).

TheRiskProductmarketisdominatedbyafewlargeinsurers,especiallyaftersignificantmerger-and-acquisitionactivitiesinthelasttenyears.Thetopfiveinsurers,TAL,AIAAustralia,ZurichAustralia,MLC,andResolutionLifehavemorethan80%ofthemarketshare,measuredbyAPI.Othersmallerinsurersmakeuplessthan10%ofthemarketshare.Seefigure2formoreinformationonmarketshare.

Figure2

MARKETSHAREMEASUREDBYAPIASOFDECEMBER2022

MarketSharebyPremium

8%

3%

5%

34%

8%

10%

18%

14%

TAL

AIAAZurichMLC

uResolutionLife

uMetLifeQinsureOther

5.au/life-insurance-claims-and-disputes-statistics

6FriendlySocietieswereestablishedbycommunitygroupsinthe1830sandevolvedintomember-focusedprovidersoffinancialservices,healthcare,retirementliving,agedandhomecareservices,transport,pharmaciesandotherfraternalservices.Theyprovidesavings,investmentandinsuranceproducts.

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.au/registers-of-life-insurance-companies-and-friendly-societies

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2.1.3RECENTINDUSTRYPROFITABILITY

Severalparticipantsnotedthatseniormanagement'scommitmentstoinvestinalternativedataarelimiteddueto

resourceconstraints.TheypointedoutthattheAustralianlifeinsuranceindustryhasfacedprofitabilityand

sustainabilitychallengesinrecentyears,whichhasmadeitchallengingtosystematicallyinvestinalternativedatausageandanalytics.Asshowninfigure3,theAustralianLifeInsuranceIndustryexperiencedvolatileprofitabilityinrecentyearsfortheseRiskProductsandreportedsignificantlossesin2019(-AU$1.4billion)and2020(-AU$0.5

billion)asshownbyAPRAstatistics.TheNetProfitAfterTaxwasAU$2.0billionfortheseven-yearperiod

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.

Figure3

NETPROFITAFTERTAXFORRISKPRODUCTS-YEARENDINGDECEMBER2016TODECEMBER2022

NetProfitAfterTaxForRiskProducts(AU$M)

2,000

1,500

1,000

500

0

-500

-1,000

-1,500

-2,000

1,448

746

1,046

669

34

-512

-1,392

2016201720182019202020212022

2.2THEAUSTRALIANPRIVATEHEALTHINSURANCEMARKET

Thereare34privatehealthinsuranceprovidersintheAustralianmarket,regulatedbytheAustralianPrudential

RegulationAuthority(APRA).TheAustralianprivatehealthinsuranceindustryisconcentratedanddominatedbyafewlargeinsurers,withover80%ofthemarketshareheldbythetopfiveinsurers.

TheAustralianprivatehealthinsuranceindustryistightlyregulated,whichhas,toasignificantdegree,limitedtheroomforpricingdifferentiationofprivatehealthinsuranceproducts.Examplesoftheseregulationsinclude

guaranteedacceptance,wheretheprivatehealthinsurercannotrejectanypolicyholdersregardlessoftheirhealthstatus,andcommunityrating,wheretheprivatehealthinsurercannotpricedifferentlybasedonanindividual

policyholder’sage,healthcondition,orclaimhistory.Toimprovesustainabilityoftheindustry,regulatorshavealsoimposedriskequalization,whichtransfersfundsfromprivatehealthinsurerswithlower-than-averageclaimcoststoinsurerswithhigher-than-averageclaimcosts,furthersupportingtheimplementationofcommunityrating.

BasedonquarterlyprivatehealthinsuranceindustryperformancestatisticsreleasedbyAPRA,theindustryreportedanetprofitaftertaxofAU$1.2billionwithapremiumrevenueofAU$26.9billionbytheendofDecember2022.The

8.au/quarterly-life-insurance-performance-statistics

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reportedprofitabilitydecreasedby34%(orAU$0.6billion)from2021to2022

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.Seetable1foradditionalinformation.

Table1

KEYPERFORMANCEMETRICSFORTHEYEARENDINGDECEMBER2022

YearEndingDecember2021

YearEndingDecember2022

YearlyChange

PremiumRevenue

AU$26.4bn

AU$26.9bn

1.8%

FundBenefits(Claims)

AU$21.9bn

AU$22.2bn

1.6%

GrossMargin

17.2%

17.3%

+0.1pp

ManagementExpenses

AU$2.5bn

AU$2.7bn

9.2%

NetMargin

7.7%

7.1%

-0.6pp

NetProfitAfterTax

AU$1.8bn

AU$1.2bn

-33.6%

Themainprivatehealthcoversofferedarehospitalcovers(orpolicies)andextracovers(orpolices).Assuggestedbythecovernames,hospitalcoverpaysclaimsforhospitaltreatmentssuchastheuseofanoperatingtheater,in-

patientaccommodations,rehabilitation,hospitalpsychiatricservices,andpalliativecare,whileextracoverpaysclaimsforgeneraltreatmentsreceivedsuchasgeneraldental,chiropractic,andemergencyambulanceservices.

Figure4showstheprivatehealthinsurancecoveragefortheyearendingMarch2016toMarch2023

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.Asof

December2023,over45%oftheAustralianpopulationhasobtainedhospitaltreatmentcoverage,and55%ofthepopulationhasobtainedgeneraltreatmentcoverage.

9.au/news-and-publications/apra-releases-quarterly-private-health-insurance-statistics-for-december-2022

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.au/quarterly-private-health-insurance-statistics

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Figure4

PRIVATEHEALTHINSURANCECOVERAGEFORYEARENDINGMARCH2016TOMARCH2023

70%

60%

50%

40%

30%

20%

10%

0%

PrivateHealthInsuranceCoverage

-55.6%55.2%546%539%541%548%55.0%

..53.2%

.

.

47.0%

46.3%45.5%44.6%43.8%

44.4%44.9%45.1%

2016

2017

2018

2019

2020

2021

2022

2023

——HospitalTreatment——GeneralTreatment

2.2.1TYPESOFPRODUCTS

Whileproductcoveragesarelargelysimilar,insurerstrytodistinguishthemselvesthroughdistributionchannelsandtargetedmarketingcampaigns.Forexample,theymayofferdifferentcoverpackages,suchassinglecover,couplescover,familycover,andsingleparentscover,allowingflexibilityovertheselectionofcoveragelevelstotarget

specificpolicyholdercohorts.Insurerscanincreasecompetitivenessbypartneringwithotherindustriestooffersignupbenefits,suchascashrebate,waiveofwaitingperiods,rewardsfrompartneredcompaniesandmore.

AssuggestedbyAPRAquarterlyprivatehealthinsurancemembershipandbenefitstatistics(seefigure5),themostpopulartotalhospitaltreatmentcoverisreducedcoverwithsomelifetimeexclusions,followedbyfullcover.

Figure5

TOTALNUMBEROFHOSPITALTREATMENTPOLICIESBYTYPEOFCOVERASOFDECEMBER2022

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

0

TotalHospitalTreatmentPolicies3,279,707

2,

125,983

327,103

73,922

FullCoverReducedCoverbut

NoLifetimeExclusions

ReducedCoverand

someLifetime

Exclusions

SomeLifetime

ExclusionsbutNo

ReducedCover

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2.2.2MARKETSHARE

Figure6

MARKETSHAREASOF30JUNE2022

MarketShare

18.7%

27.5%

7.3%

9.4%

24.7%

12.4%

Medibank

BUPAHCF

NIB

HBF

Other

BasedonthePrivateHealthInsuranceOmbudsmanStateofTheHealthFundsReport2022,therearecurrently23openmembershipinsurersand11restrictedmembershipinsurers.TheAustralianPrivateHealthInsurancemarketisconsideredrelativelyconcentrated,withthetopfiveprivatehealthinsurersaccountingforover80%ofthe

marketsharebypremiums.Seefigure6formoreinformation.

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Section3:Participants’ProfessionalBackgrounds

Forthisresearch,weinterviewed20participantsacrossawiderangeofcompaniesinAustralia.MostofthemareactuarieswithextensiveexperienceineitherLifeInsuranceorPrivateHealthInsuranceindustry.Afewparticipantshaveexperienceworkinginadjacentindustries,suchasPublicHealth,GeneralInsurance,andSuperannuation.

Inourresearch,16ofthe20participantshavemorethantenyearsofexperienceworkingintheindustry,andfourhave0-9yearsofexperience.

Figures7and8showthemarketsegmentandtypeoforganizationtheparticipantsareworkingin,respectively.Elevenofthe20participantshaveexperienceinLifeinsurance,sixhaveexperienceinPrivateHealthInsurance,whilethreehaveexperienceinadjacentindustries.MorethanhalfofthemworkforalargeinsurerinAustralia,threeworkforalargereinsurer,andtwoworkforaconsultingfirm.

Theparticipantsarecurrentlyinorhaveheldrolesatvarioussenioritylevels,includingChiefActuary,AppointedActuary,ChiefRiskOfficer,HeadofPricing,SeniorActuary,Actuary,andAnalyst.Theyhaveexperienceinvariouspracticeareas,suchaspricing,valuation,anddataanalytics.Manyparticipantshaveexperienceinmorethanonepracticearea.Thesearesummarizedinfigure9.

Figure7

PARTICIPANTS’EXPERIENCEBYMARKETSEGMENTS

ExperiencebyMarketSegments

3

11

6

LifeInsurance

PrivateHealthInsuranceOther

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Figure8

TYPESOFORGANIZATIONPARTICIPANTSCURRENTLYWORKIN

TypeofOrganization

1

3

3

11

2

uSmallInsurerLargeInsurerConsulting

uGlobalReinsurerOther

Figure9

PARTICIPANTS’AREASOFEXPERIENCE(MULTIPLEEXPERIENCEAREASCOULDBESELECTEDFOREACHPARTICIPANT)

AreasofExperience

PracticeAreas

PricingValuation

Data

Research

ComplianceReserve

02468101214

NumberofParticipants

17

Section4:InterviewResponses

Theparticipantswereaskedquestionsregardingtheirviewsandexperiencewithalternativedatausage.The

interviewincludedbothmultiple-choiceandopen-endedquestionsandaskedforapplicableexamples.Thissectionofthereportsummarizestheinterviewresponsestothesequestions,whilesection5includesafewdetailedcase

studies.

4.1DEFINITIONANDTYPEOFALTERNATIVEDATA

TheinterviewstartedwithaskingparticipantstodefineAlternativeDataintheirownway.Thequestionnairethenprovidedthefollowingdefinition:“informationsourcesotherthanpolicyin-forceandunderwritingdata,”forthepurposeofthisresearch.Mostoftheparticipantsprovidedanaligningdefinition.Theyalsoprovidedadescriptionofalternativedataalongthelinesof“usuallyunstructured,notclientspecific,notusedasdirectinputinthe

modellingprocess,notfromtraditionalsources.”Seventeenoutof20participantsstatedthattheyhaveused

alternativedataintheirpractice.TheseparticipantsthenansweredthequestionregardingthetypeofAlternativeDataused.Themostusedtypewas“Publicnon-personaldata”

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mentionedby11participants.Seefigure10formoreinformation.

Figure10

TYPESOFALTERNATIVEDATAUSEDBYPARTICIPANTSANDTYPESTHEYWOULDLIKETOHAVE(MULTIPLEOPTIONSCOULDBESELECTED)

TypesofAlternativeDatasets

12

10

8

6

4

2

0

11

10

666

3

2

Publicnon-personal

data

PublicpersonaldataNon-publicnon-

personaldata

Non-publicpersonaldata

CurrentlyUsingWouldLiketoUse

WhenaskedaboutthetypeofAlternativeDatathattheywouldliketouse,butthatwasnotyetavailable,10participantsexpressedinterestin“Non-publicpersonal”data,andsixin“Non-publicnon-personal”data.

4.2APPLICATIONOFALTERNATIVEDATA

WhenaskedabouttheapplicationofAlternativeDatausages,awiderangeofareaswereidentifiedbythe

participants.Themostmentionedareasincludedcustomere