In recent talks with former insurance company colleagues, we recalled heated conversations we had in the year 2000 about “the business” needing access to data – reliable, good quality, complete, and timely data, preferably. Back in those days, for many carriers the meetings were about who owns the data, who can access what data and, pretty importantly, who pays for all the foundational data infrastructure work needed.
Sadly, current Strategy Meets Action (SMA) research as of June 2016, shows that relatively little progress has been made since those days of long ago. Only 12% of P&C insurers have an enterprise-wide solution for reporting in place, and 14% have enterprise-wide analytical tools. Any other business intelligence function, such as scenario planning, dashboarding, scorecards, or ad-hoc queries scored less than 10% enterprise-wide (in some insurance functions such as actuarial or claims these numbers are significantly higher). The research also shows a big gap between large insurance companies (where these percentages tend to be much higher), and carriers below $5 billion in premiums. Granted, the need for different data sets – internal and external – has grown significantly, real-time and operational information has become more important in analytics, and the whole concept of omni-channel customer experience has created complicated data environments. The need for detailed analytics is much greater as the industry has evolved in scope, complexity and reporting requirements over the years.But having said that, solution providers in the data and analytics space for P&C Insurers have created solutions and applications that are more advanced than the ones we had to work with in the year 2000. From foundational efforts such as the development of data warehouses, marts, and ETL processes to reporting and analytical/modeling capabilities especially, there are now very robust solutions available in the market to support carriers’ initiatives. One place where this progress is most visible is in the area of adding new external or internal data elements or feeds. These used to involve massive undertakings, with months of experts modeling, coding, and project-managing. And then upon completion the structure was fixed, with little room to accommodate changing data needs.
What a difference some 15 years can make! Now, in the evolving P&C solutions market, data elements can easily be added, sometimes by business users themselves. Adding new data sources, internally or externally, has become significantly cheaper, faster, and easier. Reports, dashboards, what-if scenario running, and the likes often require less reliance on IT or actuarial specialists. And analytics is the fastest maturing technology for insurers right now.Carriers that embraced analytics early-on and use these tools are starting to see the benefits: rates more accurately reflect the underlying risks; claims trends are better understood, anticipated, and supported by external data sources; and customer behaviors are much more transparent, resulting in individualized guidance and a better customer experience.
As an industry, we can and should capitalize more on all of the data we can access, both internally and externally. There is technology available to help us do so and meet our analytics needs. Our customers and agents expect us to understand the ever changing markets. Our business-user colleagues have been waiting way too long to get these tools to do their jobs. And their patience is justifiably wearing thin.
This content was prepared by SMA for the exclusive use of S&P Global Market Intelligence. The views and opinions expressed by SMA do not necessarily reflect those of S&P Global Market Intelligence. SMA is not an affiliate of S&P Global Market Intelligence.
About the author:
Monique Hesseling, Partner, SMA
Monique Hesseling is focused on developing effective roadmaps and helping companies expand their business opportunities. Recognized internationally for her knowledge and expertise, she is assisting SMA customers across the insurance ecosystem with strategies and implementations – helping them to support business growth and operational efficiencies by applying technology and analytics. Drawing on her international experience, Monique brings actionable ideas for innovation and opportunity, guiding insurers and solution providers on their transformation and innovation journeys.