Return of the Guru

Why Aren’t Insurers Better at Adopting BI?

Ara Trembly
Insurance Experts' Forum, June 7, 2010

Business intelligence (BI) is all the rage these days, with vendors touting solutions to gather and analyze information about our companies and our customers to help us make better decisions. In this continually flaccid economy, it seems obvious that this should be a priority for insurers, but a recent survey indicates carriers just aren’t getting the job done when it comes to BI.

In the latest issue of IASA’s Interpreter magazine, Deb Smallwood, founder of SMA Strategy Meets Action, reports on her firm’s survey of 200 IASA Educational Conference and Business Show registrants regarding the progress of technology in insurance. Among the findings: The area with the most failures and lowest adoption rate is technology related to data enhancement applications, business intelligence and analytics. So it seems that while BI efforts are being made in insurance, the success rate of such initiatives has not been significant.

Why should this be? What is it about our industry that doesn’t lend itself to successful BI implementation? I would speculate that one problem with BI in insurance—or indeed in any setting—is that companies tend to view it as an IT project, instead of as a business decision involving the entire organization and enterprise. One of the key aspects of BI is that data from all parts of an enterprise need to be brought together to form a single version of the truth accessible and usable by all parts of the enterprise. That means that business users especially need to be part of the BI process, yet the age-old tension between business and IT workers might tempt the business side to ignore BI implementation as something that should only be done by those “propeller-heads” in IT.

Another factor—one that has been talked to death by pundits like me—is the preponderance of legacy systems that contain critical data. Come Hell or high water, many insurers refuse to let go of such systems as long as they continue to function. And they do continue to function as they always have, but in many cases they cannot function in the same reality as newer Web-based applications. This leaves insurers in a quandary over having to either rip-and-replace the legacy systems—at considerable cost—or find someone who still understands and can maintain those old systems—an increasingly difficult task in our nation where languages like COBOL are no longer taught in computer science programs.

Further, even when legacy systems are replaced, the migration of data from such ancient systems to more modern applications is a tricky and involved process that also eats up lots of time and money. I remember reading a story once about a man who had remained shut up in his home for something like 40 years. When he finally emerged into the “modern” world, “modern” bacteria, to which he had been unable to form antibodies while in his solitary cocoon, killed him. It seems the situation with legacy insurance data may be somewhat similar.

On the whole, however, it seems clear that the reason our industry hasn’t, for the most part, moved successfully forward on BI technology is the same as the reason it hasn’t moved forward on other technologies. Too often, we’re satisfied with the status quo, or with waiting to see what some other insurer does or doesn’t do, before dipping our toes in the water.

While caution is sometimes laudable, it must also be balanced with a vision of the future that allows for some risk and acknowledges that something as important as BI needs to be supported and built across an entire organization.

Ara C. Trembly ( is the founder of Ara Trembly, The Tech Consultant, and a longtime observer of technology in insurance and financial services.

Readers are encouraged to respond to Ara using the “Add Your Comments” box below. He can also be reached at

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

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Comments (1)

Great article Ara.
I would like to draw your attention to this YouTube video of an insurance specific BI system called InsFocus, which is gaining popularity amongst insurance companies

Posted by: yaron g | January 29, 2012 4:23 AM

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