No matter how many times phrases like innovation and disruption are touted, there's one underlying factor that all these technologies help deal with in one way or another — data.
“Certainly, data and what we do with it and how we can extract intelligence from it is a very driving part of what we do day-in and day-out,” says Justin Manley, CIO – Americas, Torus Insurance. “Data is key for any business, whether it’s got two employees or 200,000 employees — it doesn’t matter, it’s incredibly important.”
This perspective is representative of the shift in mindset when it comes to technology, which entails more data-centric operations throughout the business, from back-end architecture to the C-suite.
As data operations become more robust over the course of the next few years, investments in technology will need to be matched, to a certain degree, by investments in IT talent.
For the most part, investments in the technology have arrived, or at the very least, are on their way; recent CEB TowerGroup research and commentary asserts that the industry is in the process of turning cloud, among other data and distribution technologies, into table stakes. Correspondingly, data analysts, data scientists and a host of other new job titles are currently hot commodities not just in insurance, but across most consumer industries. However one title, in particular, seems to be on the tip of the insurance industry’s tongue: chief data officer.
“Your ability to hire somebody for that role requires you to have a rather mature and robust organization, otherwise I think it’s always going to be the CIO’s ultimate responsibility,” says Manley. “And for me, the chief data officer is still somebody reporting to the CIO, somebody still a part of the technology organization. However, I’m aware that very, very large insurance businesses, what they’re doing as a result of the wild and uncontrollable nature of data that has grown in a 100-year-old organization, is a bit different, since I started from scratch.”
Torus was recently acquired by Enstar Group, Ltd., a Bermuda company that acquires and manages insurance and reinsurance companies and portfolios of insurance and reinsurance business in run-off, and offers management, consultancy and other services to the insurance and reinsurance industry—the deal is expected to close by the end of the year at a value of $692 million. Torus is, relative to the industry, a very young company — its Americas unit is only four years old — which gives them the advantage of having entered the industry during the tech boom without any legacy systems or entrenched enterprise architectures. Manley has served as Torus’ CIO for the Americas unit since its inception, and remains the only technology individual in the C-suite of the Americas. (Globally, the company used to have one CIO while Manley served as CTO of the Americas, but as the company has grown, they have added CIOs to specific regions.)
Therefore, in speaking about how Torus’ data-centric operations operate without an officer designated to manage the data, he doesn’t speak cautiously of a business transitioning, adapting to an advanced business model and enterprise architecture. Instead, the company’s youth is what gives their commitment to maintaining a data-centric, evolving operation, as well as the enterprise systems serving as the backbone for that commitment, a clarity you don’t often find in the industry.
“The No. 1 rule is that data is king,” says Manley. “We’ve built a data warehouse at the center of all of our systems. We have no point-to-point integration between any systems; a policy administration system does not have a feed to a claims system does not have a feed to a finance system. We knew as we evolved, we’d have additional policy administration systems, we’d have finance systems made mature — we knew they would change, and we didn’t want to have to change every pipe to every other system.”
The simplicity of this hub-like system is very beneficial given the global nature of Torus’ operations. The carrier maintains nearly 600 employees located in 15 offices around the world, and more than a third of them reside in Gurgaon, India. However, this office is not merely an outsourcing extension, Manley explains. “They’re operations, they’re actuarial, most of it’s back office — I’ve built a development team there. These people are part of my team, and I have video conferences with them monthly and I travel over there two or three times a year and I’ve got two guys over right now who are here for a month working. It’s been a great environment.”
The effectiveness of this type of operation is reliant on a fluid back-end organizational structure that enables the same access to the company’s ever-growing data stores no matter what part of the organization — or globe — you are working in.
“As we continue to evolve, you take that data in the middle, and eventually, wrap an enterprise service bus around it so it’s more of a messaging-based architecture,” Manley says. “The data warehouse in the middle is always a consumer of that data, so it’s always taking the messages off the hub and keeping that central data store populated and accurate in near-real time. But then the subsequent systems in the outer ring continue to be just publishers and subscribers of event-driven data, so as a policy is quoted and bound, the policy administration systems publish that message, and if the claims system needs to know about it, it consumes that message off the queue and populates its own data store,” says Manley.
But does this data-centric operating system necessitate more of a technology influence in the C-suite? Not as of yet, according to Manley. With the proper architecture in place and savvy personnel located around the globe, that type of dedicated oversight hasn’t become necessary to achieve efficient operations.
Nevertheless, Frank Petersmark, analyst with X by 2 and former CIO, says that most insurers are not lucky enough to be in that situation, and therefore, should consider hiring a chief data officer to make a statement, a commitment to technology and data.
“If I were an insurance company now, I wouldn’t wait for my data to be in a normalized, easily retrievable, ready-to-model, leveragable state,” says Petersmark. “I would announce my strategic intent to use information as a competitive differentiator by appointing a chief data officer. It’s a great way to send a message to the organization and to your competitors as well.”
Petersmark went on to explain that it would be a timely hire for carriers currently planning or undergoing a core system transformation; while insurers are becoming more aware of the benefits of keeping data top-of-mind throughout the process, especially in terms of integrating software architectures, having a chief data officer to guide that process would relieve others, who may not be aware of what exactly data-centric operations entail, of planning for such.
“There are people — mostly in IT, sometimes the CIO, sometimes not even the CIO — who are trying to assume that role now,” says Petersmark. “At big companies, even at mid-size companies, you might have someone who’s real passionate about it, but if it’s not organized, it’s not going to get executed that well.”
Even if a carrier gets through that transformation successfully without a chief data officer and possesses more robust data operations, there’s still more reason to consider the hire, according to Petersmark. Oftentimes valuable insights go undiscovered simply because there’s nobody there to make it happen — especially since the business side doesn’t always know what they should be looking for or what’s possible when it comes to gleaning specific insights.
“When you think of the kinds of priorities most IT shops and CIOs have, is it pretty simple stuff? Sometimes, yes. But if there’s nobody there to push the buttons or if there’s nobody on the executive team to say, ‘This is more important than these 12 other things,’ it’s tough for the CIO to make this happen,” says Petersmark.
Indeed, when Torus’ Manley was asked what insights he would like to be receiving that he currently isn’t, the answers were simple. After thinking for a minute to take in the overwhelming possibilities, he had a thoughtful response: “In insurance, we’re essentially fighting over the same dollar, and as I’ve seen it, we do an excellent job of understanding, analyzing, modeling the business we capture. But, if I was a chief data officer, I would want to point the business at greater intelligence and understanding of the business we don’t capture; where we were touched, but they didn’t buy from us. Where did they stop in that process, why did they stop, what were they looking for? Then, how do we fine-tune pricing algorithms, ratings, products, the data-capture itself — what can you dial back to increase that capture and make that sale.”
Perhaps not coincidentally, Petersmark landed on many of the same insights when discussing how insurers will take their data operations to the next level. “Once carriers figure out the exact data points needed to understand customers, potential customers, why people want what they want, why they leave, where the next product opportunity is, where the next geographical opportunity is — those things are coming, once insurers really understand that, it’s going to change everything.”
The path of least resistance to that point differs based on operating environments unique to each company. Looking for a chief data officer who is the right fit, and whose sole job it is to chart that path and make it as smooth as possible, just might be fruitful, because the one thing that’s certain in this process no matter how many data experts are hired, there are going to be bumps in the road, and it’s going to take time.
“My thought is, start now and make all the mistakes,” says Petersmark. “Many mistakes will be made, but you’re going to learn a ton along the way, and you should come out ahead of your competitors.”
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