Insurance carriers are inundated with data—data from their policy admin systems, financial systems, CRM systems, claims systems, etc. Because most carriers' IT systems grew up in siloed business units, there was little to no sharing of data across departments. Business would ask IT to provide enterprise views, but IT would come back with very expensive programs to prepare the appropriate data model, cleanse the data, migrate and transform the data, mine the data and, finally, provide a report that was out of date because the data was days or weeks (or months!) old. This led to businesses creating massive numbers of Excel spreadsheets or Access database reports that were/are very myopic, and semantically inconsistent with their peers, who were doing the same task. 

Many carriers have tried their hand at master data management (MDM). They spent tens of millions of dollars to try and get the uber insurance data model correct, and consolidated (and of course cleansed and migrated to a data warehouse) before they could produce any meaningful reports that provided business insight. Basically, they were trying to “boil the ocean,” and many programs failed under their own weight.

With the economic and competitive pressures carriers are under today, they are again looking at business intelligence (BI) or business analytics (BA) to provide business insight that will allow them to make better business decisions.

While vendors vary on the precise definition, most define BI as historical business analytics, while BA covers BI, predictive or future looking analytics as well as self service analytics. Most insurers are still trying to get value out of BI, and view predictive analytics and modeling to be future state. BI and analytic projects rated third-highest in priority in our most recent CIO report. 

Carriers need to learn from the mistakes of the past. Boiling the ocean and trying to get everything right before getting any business value failed, and will fail again. Carriers' data mastery approach to enterprise reports and dashboards must take an incremental, value-add approach, and be driven by the business. I do not mean the traditional business defines the requirements and gives them to IT with an approved budget, but the business actually takes accountability of the success of the project.

While this may cause friction between business and IT in some carriers, they will find themselves falling farther behind their competition. We see the barriers between business and IT breaking down within many areas of insurance companies. There isn’t a more important and more valuable time for this to continue in their BI initiatives. IT needs to encourage the business to take this level of ownership and accountability, or it might find the business outsourcing these tasks to someone who will.

This blog has been reprinted with permission from Celent.

Benjamin Moreland is a senior analyst in Celent's insurance practice, and can be reached at bmoreland@celent.com.

Readers are encouraged to respond to Ben using the “Add Your Comments” box below.

The opinions posted in this blog do not necessarily reflect those of Insurance Networking News or SourceMedia. 

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