For Insurers, It's All About Analytics

It goes without saying that insurance companies possess enormous amounts of data on their customers. But without the proper tools to turn those mounds of data into business intelligence to make better decisions, much of it is useless.

That was a major theme of the "Actionable Analytics" event Wednesday sponsored by IT-oLogy, a national non-profit organization dedicated to growing the IT profession, and iTsSC, a group made up of insurance technology companies located in Columbia, S.C., where the event was held.

John Belizaire, founder and CEO of FirstBest Systems, which provides insurance software solutions, reminded audience members that the insurance industry is "100 percent dependent" on data.

"Whether it's claims management, pricing models, fraud prevention, it's all based on data analysis," he added.

However, Belizaire noted that while the amount of data in the insurance industry is growing at a tremendous rate, the analytics tools available "are way behind" being able to deal with the volume of data that exists.

This creates "blind spots" for insurers that can affect their business. To illustrate this point, Belizaire told a humorous anecdote about the owner of a building who submitted a claim to his insurance company after the building burnt down. After further investigation, it was discovered that the reason the building caught fire was because the structure next to it was on fire, due to an explosion in that building. The reason for the explosion? The building housed a bomb manufacturer. With a bit better analytics tools, the underwriter would have probably created a different policy for its customer, had they known the building was situated next to one that manufactured bombs.

"There are some tools coming out there today to help you better assess exposure concentration, create better financial reports for things like corporate risk coverage, and telematics," he said.

Belizaire advised insurers to first decide what their business strategy would be around data analysis, and after that "invest in data scientists. You want these guys helping you." He also said insurance companies should create an internal "data hub" in order to assemble and analyze core pieces of data used to make business decisions.

[The New Architecture Of How Things Are Done In Insurance ]

Euan King, CEO of North America technology for insurance technology vendor the Innovation Group agreed with Belizaire's sentiment, saying that in the insurance industry there is a "lack of alignment between data programs and business goals, lack of a mature data model and lack of tying analytics to decisions." He too advised insurers to invest in powerful analytics tools, but that they shouldn't be solely the plaything of IT departments.

"Ninety percent of the work of a powerful analytics tool should be used by the business," he said. "The power of these tools is at the management level, and at the customer service level."

Using CRM Effectively

Another use of analytics is to create better CRM programs. Claire Anderson, senior manager of special projects for American Specialty Health, a national health services organization, discussed her company's long and winding road of implementing a CRM system. The organization initially deployed one in 2004 in a pilot phase, and the project didn't expand beyond its pilot groups until 2009. At that point, the system was deployed to the sales department, but data between departments using it was not shared and stuck in silos. Finally, from 2011 to 2013, American Specialty Health embarked on an ambitious project to bring the disparate CRM databases together, and extend it across the company.

Anderson acknowledged that many companies are skeptical about CRM programs, since they tend to be expensive to integrate and historically have high failure rates. However, as long as a company clearly defines what department owns the CRM system, and the data is visible in real-time and across the organization, it can be highly valuable.

[Check out this session: IT Is Your Business, Run It Like One at Interop, which runs from September 30 through October 4 in NYC.]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio