Big Data's Big Guns: Nationwide
Multiline carrier Nationwide is taking the lead not just on effective use of data and analytics in its customer segments, but exposing the next generation of data professionals to the exciting opportunities afforded by the insurance industry.
“I flew jets in the Navy up until 2002,” says Mike Kozub, SVP of customer insights and analytics for Nationwide. “And I think insurance is a fascinating industry for a couple reasons. First of all, you’re managing risk. You want to grow, but you can grow the wrong way. So there’s real high stakes when it comes to making decisions.
“And more recently, you have channel conflict,” he continues. “Plus, you’re interacting with consumers who largely don’t want what you’re selling, and at the time that they get to enjoy the fruits of what you deliver it’s a negative interaction [because they’re filing a claim for a loss].”
Like MassMutual, Nationwide has partnered with a local college — Ohio State University, the university with the third-largest enrollment in the country. The Nationwide Center for Advanced Customer Insights (NCACI) gives OSU students in advanced degree programs the ability to work with real-world data to solve some of the biggest insurance business problems. Faculty and students from the marketing, statistics, psychology, economics and computer science departments work with Nationwide to develop predictive models and data mining techniques aimed at improving marketing and distribution, identifying consumer behavior patterns, and increasing customer satisfaction and lifetime value. The NCACI opened in 2008 and employs eight to 12 students at a time for about 20 hours a week, says Chris Nicholas, VP of customer analytics for Nationwide.
“The feedback we get constantly is that students can’t believe the diversity and complexity of the problems we get to work on,” he says. And students quickly learn that as they develop solutions, “if we come up with a robust answer, it will be put into practice.”
An increasing percentage of Nationwide’s data science team comes from the NCACI every year — including the executive-in-residence who manages it, Mike McCaslin. He was a social psychology major in college.
“What I liked about Nationwide was that it had an academic approach to the analytics work, so even if people we try to bring in on the team aren’t initially interested in insurance, this is a chance to work on really difficult problems” and learn that the insurance industry has robust opportunities, he adds.
For a company betting big on customer acquisition — Nationwide spent $352 million on marketing last year, the sixth-most of P&C insurers, according to SNL Financial — hiring and retaining the best data professionals to target the right customers with the right message is crucial.
“Folks have gotten the support of the customer analytics team and success becomes a self-fulfilling prophecy,” McCaslin says.