The Future of Insurance: Its About the Data
Insurance Experts' Forum, May 15, 2013
Returning home from the ACORD-LOMA Forum (ACORD-LOMA) last week, I was reminded of a time about 12 years ago when I wrote that data is the lifeblood of the insurance industry and a strategic asset that needed effective management. The recollection was prompted in part by the fact that during ACORD LOMA the topics of big data, business analytics and business intelligence, and the need for quality data, continued to be hot topics both in terms of insurer priorities and discussion points. The fact that the industry is still buzzing about these topics seems to indicate little progress has been made in the last 12 years. And, to make matter worse, recent research indicates insurers are, on average, using only five to ten percent of their current data.
Apparently, it is proving difficult for many insurers to put action around mastering data management. Why? As Innovation Group’s Ben Moreland noted last week in his blog entry, it comes down to the lack of an enterprise data management strategy. For the last three years running, insurers have cited analytics as a top IT spending priority. If that is true, why is this happening? As noted by Mark Gorman in a claims analytics session at ACORD-LOMA, too many core systems replacement projects do not include the need for data management, analytics and reporting as a priority from the beginning, and the result is another silo of data created by the core system replacement project itself. Unfortunately, in the real world, analytics are not considered an integral part of a core system replacement project because it “distracts” from the resourcing and core system priorities.
The problem with this approach is that it creates significant business issues and additional costs, as well as the inability to leverage the new core system to effectively manage the business. Adding to this challenge is the exponential growth of data and the difficulty capturing masses of data due to “computers being everywhere and nowhere” as noted by the ACOR- LOMA closing keynote speaker, Michio Kaku. All of these factors, further complicate any insurer’s ability to manage, use and ultimately master data.
So, with these challenges, how should insurers plan and respond? We need an infusion of focus and priority once again on data…across all projects and operational initiatives. Now, insurers must aggressively begin to master their current “small data” issues before “big data” takes over each and every project and initiative within the company. Insurers must develop an enterprise data management strategy underpinned by a robust insurance data model, data warehouse and data mart, data sets, and ETL process in order to bring sources of data together with a robust analytics, business intelligence (BI) presentation layer and insurance-specific key performance indicators (KPIs).
The combination of an enterprise data management strategy and a robust data mastery solution that is part of every project or initiative will empower data as the “lifeblood” of the organization. When accurate and timely data is transformed by analytics and BI tools into relevant information that can be rapidly delivered where it counts, executives and business staff can benefit best by taking immediate action on the insights uncovered.
The future of insurance is rapidly being shaped by internal and external factors, decisions and priorities around data management. While we may not be able to control external factors, our ability to manage internal factors is key to differentiation by analyzing customer, product, channel, competitive, risk, environment, weather or any other data relevant for insurance that can help achieve breakout results.
Denise Garth is the executive vice president of strategic marketing and industry relations, and global head of market strategy for Innovation Group North America. She can be reached for further comment or information via email at email@example.com
Add Your Comments...
If you have already registered to Insurance Networking News, please use the form below to login. When completed you will immeditely be directed to post a comment.
You must be registered to post a comment. Click here to register.