For a long time, many carriers have employed business intelligence (BI) applications as point solutions. The motley assemblage of systems prevalent at many insurers has prevented them from employing BI on an enterprise-wide basis. While efforts to build data marts are helping to eliminate these barriers, Jeffrey Glazer, SVP and GM, LexisNexis Insurance Solutions, New York, says an incremental approach works fine if paired with a holistic vision.
INN: What are obstacles to insurers incorporating business intelligence?
JG: Most carriers' IT environments today include numerous systems for policy administration, multiple instances of claims systems, multiple billing systems, and several compliance and reporting solutions. These disparate systems typically support individual writing companies, or different lines of business, and were acquired when the writing company or the book of business they support was acquired by the carrier. Disparate systems lead to business silos, and result in a myriad of issues, including inefficiency, bloated IT budgets, limitations on funding necessary for modernization efforts and, of course, effects on the bottom line. But those aren't the only problems this situation causes. The various technology environments, different data definitions, and issues with data synchronization and currency that are characteristics of these environments all combine to make the implementation of enterprise BI very challenging, if not impossible.
INN: Have customer expectations of BI changed in recent years?
JG: Customer expectations of BI have changed. The technology advancements we've all experienced in recent years, whether in business or our personal lives, have led to a dramatic rise in the expectations. Technologies have advanced to the point where straight-through processing - enabled by data services and advanced analytics - enable our systems to monitor the critical success factors carriers use to monitor the health of their businesses in real time.
INN: What is the relationship between data quality and BI?
JG: Data quality is essential to effective BI - there's just no getting around it. The old adage "garbage in - garbage out" still applies. If the underlying data isn't complete or accurate, the BI solution results are limited. Which is not to say that carriers that have data issues can't succeed with implementing BI. However, doing so first requires a thoughtful approach to addressing the challenges they face.
As I mentioned earlier, many companies are hindered by the disparate systems they use to run their core business. It's important to develop a plan for how to overcome some of the major causes of poor data integrity, and that typically involves an incremental, step-by-step approach. It's somewhat unrealistic to think that enterprise BI can be implemented in a short period of time. However, good results have been produced by carriers that have focused on a particular area of their business (policy admin, claims, etc.) and committed their organizations to sustained, incremental improvement.
INN: In what part of the enterprise can BI be most effective?
JG: The most effective approach to BI is an enterprise approach. However, due to time and resources, this should be the end goal - not the over-reaching objective of early initiatives. In today's economic climate, carrier IT departments must deliver business benefit in the short-term. Most carriers that are successfully implementing BI are following an incremental approach, addressing one problem area or one piece of the business at a time while keeping their eye on the ultimate business-wide goal.
The particular choices on what to focus on first varies according to the demands or priorities of the particular carrier's business. For example, if the carrier has an expense management problem, they may want to focus on claims first. If the focus is on growing their business, they may want to concentrate first on the business origination and underwriting areas. There really is no single approach that makes the most sense for all carriers. It's very important, however, to keep the big picture business goals in mind.
While the implementation of a BI solution may seem daunting to some, the business benefits are unquestionable - particularly in the current economic climate. It is critical that insurance executives have access to, and a comprehensive understanding of, the data coming out of their business. The best news is that BI solutions have never been more capable, more affordable and more adaptable.
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