Editor's Note: This article is part of a larger feature piece on underwriting analytics; see Underwriting Analytics: Time for Action for more.
Many of the top tier insurance companies have grown globally both organically and inorganically, and as a result have inherited fractured and siloed legacy systems, explains Dr. Henna Karna, actuarial business information officer for AIG.
"Our legacy systems are an uncomfortable problem in our industry as many companies have not been focused on their systems in the past as aggressively as other areas in finance," she says. "Our industry is still fairly segregated, and many of the industry's efforts are to break down those silos. A world where underwriters can get a hold of the big picture and find synergy across the entities we ensure would allow for the precision our industry craves. A common concern in our industry is that individuals or entities may have multiple policies, written in different places or by different agencies that we may not know about."
For underwriting, being able to segment data is critical, Karna says, as is verifying that the data is trustworthy and knowing where the holes are, not just that it is incomplete but fully aware where it is incomplete.
"The differentiating factor for companies may become how they append analytics and augment their data with something that's publicly available, and viable information," Karna says.
For example, she says the insurer frequently will try to "triangulate" information to determine whether it is considering perils and points of failure appropriately. "That's partly why we need broader types of data: to be holistic," Karna says. "It could be that we are looking at different geographies and measuring the exposure impact in different parts of our footprint. From a commercial standpoint, what are the areas that we are entering: do I know enough about that business? What is available from within and outside our industry that can help us get a more holistic view of that space? What do we not know exists about our policies that we should know about? Being aggressively curious and cognizant of what we have from a data standpoint is going to be a game changer."
Karna says the most dramatic improvements she has seen in the technology side of the industry has been operational, and while she declined to share her key performance indicators, she believes that tracking the number of data-driven decisions a company makes each year, will empower our insurance industry to measure appropriate ROI and keep momentum and focus. "From an underwriting standpoint, that’s pretty critical: to be able to not only access and augment your data but to better segment your market and price differently. Data-driven was yesterday, insight-driven is today," she says.
In terms of adoption by the underwriters, Karna says that an iterative approach to builds, in order quickly receive and respond to feedback, is the path forward she would recommend to anyone beginning an analytics project. "The biggest difficulty is culture change," Karna says. "Knowing that it is not a matter of change, but the fact that we need to change, and it';s really a matter of when we change is an important nuance to consider. Education is also a big part of a game; for the questions we are asking, we find multiple answers. It can be overwhelming, but the complexity is what makes it interesting."
One vision, Karna says is important to consider is an end-to-end ecosystem for actuaries."That would be an environment that ties our data and your systems together," Karna says. "The technology has caught up for our industry to go digital. It's now incumbent upon us as an industry to look at what real-time feels like for insurance."
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