The expanding scope and reach of data is changing the way insurers succeed or fail in the marketplace yet many are not getting the message, according to Kevin Toth, vice president at Harleysville, a Nationwide Insurance company.
More directly, data management can no longer be considered merely a skill or function or a job. “When done correctly and embraced by the sophisticated insurer,” Toth said in his keynote address at the IDMA 2014 Annual Meeting and Seminar in Philadelphia this week, “data management is the basis on which we can compete in an industry that never changes.”
His call to action is to give modern data management “a seat at the table where business strategies are managed and budgets are approved.” And for those businesses that are pensively awaiting the arrival of big data, it should be common knowledge by now that the waves of future data practices have been crashing for years. “It crashed with the price the airline charged you for your ticket here, it crashed with the books you were offered at Amazon.com,” he said.
What’s gone widely untended in the insurance industry is not necessarily technology but a lack of alignment and empowerment of resources that can be harnessed for business, according to Toth. “We talk about data as cold and lifeless. We mine it, manage it, scrub it and push it out.” It’s little more than a handoff, he said, but for the process to work there has to be perfect alignment between the people who have the data and the people who do something with it.
At the same time, business leaders often doesn’t know what data it needs until it sets out to solve a problem, such as a high rate of slip and fall claims. “We may ask for weather patterns to compare to claims, yet IT was never told to code for weather in third-party liability claims. The business leader slinks away and the data manager wonders why this person — who doesn’t know what data is being collected — is allowed to run the business.”
The message is one of awareness, alignment and change management. Insurers need to be aware of widely available sources of hidden determinants in environmental factors affecting claims and risks, and align their organizations to measure them.
Change management requires preparing people to succeed in a new environment and communicating constantly for the most visibility and adaptability. “You cannot be guilty of over-communicating when it comes to your commitment to data, your vision, how you are using data and how that will change all facets of how your value chain will interact. “
Finally, insurers can do a better job of balancing data with market reality. Agents place emphasis on types of things underwriters want to write, and the role of analytics is to clarify the mission, not to undermine it.
To be honest, “business often doesn’t know what it needs and most of the data pushed out by IT is never used,” Toth says. “Statistical reporting is just the price of admission. It gets you compliance but does not give you sustainable advantage if the business does not know what it wants to do with it.”
