Insurance companies are built on business intelligence it’s in their DNA. So, one would imagine that the industry would be the most eager adopters of business analytics. However, while insurers understand the immense potential of these analytics solutions, they still struggle to realize potential large-scale value of leveraging such information.
Insurers are caught in a complexity predicament because of frequent mergers and acquisitions, expanded product and service offerings and more stringent regulations. These factors have created larger, yet increasingly fragmented, business entities burdened with numerous duplicate and siloed systems. Insurers are creating more multifaceted enterprises and realizing the greater need for insight as leaders work to effectively capitalize on synergies, opportunities and capabilities while reducing IT redundancies. These new organizations have intricate infrastructures, making it even harder to gain trusted insight when and where it is needed most.
Today, insurers struggle to answer fundamental performance questions, such as:
- How do we ensure a complete and accurate view of business performance?
- Where is our business strong including specific geographies, lines of business and products?
- What are our vulnerabilities financial, regulatory and competitive?
- Where are there redundancies and opportunities for consolidation?
Insurers not only need a complete and accurate view of business performance, they need it quickly. In an era of growing regulatory burden and scrutiny, insurers need unprecedented agility to comply with ever-changing reporting requirements and respond promptly to new mandates and ad-hoc requests.
Insurance enterprises also seek timely insight into market and business developments such as low-performing regions or product lines so they can take rapid action to capitalize on new opportunities or limit risk, whether that involves changes to product mix, rates, customer service, or even distribution channels.
How can insurers address these challenges to compete more successfully and profitably? It starts with a checkup.
Insurers advocate periodic “checkups” for their policyholders to ensure that coverage is adequate to meet their current needs and risk levels. The same wisdom applies to a firm’s business intelligence infrastructure.
When evaluating the health of their business intelligence capabilities and evolving requirements, insurers should consider the following:
- Do we have a 360-degree view of the customer and our business? Acomprehensive data model can accommodate all data sources within the insurance enterprise, providing the foundation for 360-degree client and business visibility. Since data model creation has historically been one of the most complex, time-consuming and resource-intensive aspects of any analytics initiative due to specific business and regulatory requirements a pre-built data model for insurance enterprises reduces costs and speeds time to value for analytics initiatives. Additionally, pre-built statistical models that users can manage centrally and reuse across the enterprise help to optimize investment and further reduce redundancies and complexity.
- Can we easily incorporate new technologies into our analytics environment? As the volume and sources of data continue to grow rapidly, insurers require flexible platforms that enable them to rapidly accommodate and act on information from new sources, including machine-to-machine devices, geospatial systems and social media all of which can deliver important information on the business and its health.
- Can we get the insight we need quickly? There are several factors that go into this consideration. First, can our systems integrate and deliver real-time or near real-time information from across the enterprise without delay? Second, can line-of-business managers and analysts quickly access the information they need directly and on demand, without relying on the IT department for critical business reports? Increasingly, insurers require the ability to put actionable information directly into the hands of line of business users. Unified reporting across all functional domains and interactive dashboards provide business leaders with continuous performance monitoring capabilities ? from their own desktops. For example, with advanced analytics, the company might find that a growing number of grandparents in that area are raising their teenage grandchildren and that its auto insurance offerings or rates are no longer competitive for these policyholders. With this information at their fingertips, insurers can respond quickly to restructure product mix and pricing, especially when a rate change can take from two to three months to execute. Further, strategic goal analysis capabilities provide visibility into corporate performance in time to make adjustments and reach goals.
- Do we have complete and integrated visibility into the end-to-end insurance lifecycle? Many insurers continue to struggle with siloes that impede visibility across the lifecycle. For example, individual systems may provide intelligence on claims, policy performance, or even agent management. The challenge for many organizations is gaining insight across the interplay of these distinct business operations, beginning with quotes and ending with policy termination that can identify important trends previously obscured. For example, with complete lifecycle visibility, firms can conduct granular analysis of their agent base, identifying agents with the strongest and weakest performance, including binding ratios and loss ratios. Using this intelligence, insurers can take action to provide additional support for agents or consider modifying rates for the best and lowest performers. Additionally, insurers can compare costs associated with producing agents vis-à-vis their policy premium value.
Today, insurers understand the immense potential of the data within their enterprises. However, organizational complexity and siloed systems prevent enterprise-wide visibility and expectations. Line-of-business managers need a 360-degree view of customer interactions across the entire lifecycle from quotes through attrition. This enables timely and complete business insight for insurers, anytime and anywhere, for unprecedented power and control. To ensure success, it is imperative for insurers to take stock of their current IT environments and then set a solid foundation for expanded insight in the year ahead.
This blog has been reprinted with permission.
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