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Insight Wins The Game

John McCormack June 2006

For some time now, insurance companies have made technology investments a priority. The result? Instead of disparate, paper-based information residing in hard-to-access metal file cabinets, all kinds of e-data languish in disconnected computer systems.

Now, insurance companies are realizing that if they do not find a better way to use this data, the whole foray into information technology might go for little more than naught. That's where performance management "scorecard" systems come into play.

These systems, which draw on data from legacy systems, provide executives with a comprehensive view of the performance of a business. As such, insurance professionals can measure a company's activities in terms of its vision and strategies.

"In the 1990s, insurance companies began to invest in all kinds of information systems. They were drinking too much of the technology Kool-Aid and ended up with lots of information and data and didn't know how to make the pieces work together," says Mike Callaghan, vice president, Opus Solutions, a Hinsdale Ill., Verint Systems Inc. company that provides performance management consulting services and technology products.

Robert Lasher, president and CEO of iPartners LLC, an Atlanta-based application service provider (ASP) to the property/casualty industry, agrees that insurance executives typically struggle when trying to make decisions and act strategically based on data pulled from traditional information technology systems.

"Scorecards provide managers with the knowledge to make more informed decisions. In addition, scorecards serve as a great way to communicate key measures across an organization," Lasher says.

MANAGING PERFORMANCE

Identifying the need to make better use of data is just the beginning. Insurers need to find a system that can create a way to view useful performance measurements, via scorecards that contain the information needed to drive their businesses forward.

In addition, insurance companies have to find a way to cost-effectively get these systems up and running-a challenge that is often daunting for small or mid-sized companies.

Trying to keep track of performance information was becoming a problem for Majestic Insurance Co., a workers' compensation carrier based in San Francisco, says Grace Pan, controller and vice president.

The company, which has about 85 employees and writes approximately $90 million of business annually, was required by its board to present companywide performance metrics on a quarterly basis. In addition, company leaders realized that having access to performance management information was becoming an imperative for executives and staff as well.

"With a small company, people wear multiple hats and perform multiple tasks-and they don't have the time quarter to quarter or month to month to come up with these reports," Pan says. "When we were producing these reports on paper, we would come up with two-inch to four-inch binders. It was just too much information to process."

The reports were not only cumbersome to produce, they were not very useful to the Majestic's board members, executives and staff. "The board members want to glance at the reports and get the information they need. They don't want to struggle with a four-inch binder full of material," Pan says.

To address the problem, Pan considered hiring a full-time staff member to create more user-friendly performance scorecards from the company's disparate information systems, but quickly realized that such an approach just wouldn't be time- and cost-effective.

As a result, Pan began to look for a system that would help to create performance management scorecards. Before scouring the market, however, she met with other members of the management team and came up with the following list of vendor criteria: data warehouse background, insurance industry knowledge, financial reporting knowledge, mobile access to the system, automatic alerts for specific performance criteria and a consultative orientation.

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