Mimicking the success of personal lines carriers such as Progressive, companies within the commercial and life insurance sectors are getting ahead of competitors by creating an information advantage. This approach is helping organizations react to immediate or imminent market conditions faster and better, which are keys to corporate growth.
Micro-segmentation, or combining internal customer information with new and non-traditional external data sources to provide more granular information of the perceptions and behavior of target audiences, is one of the most efficient ways to achieve an information advantage. However, many insurers in the property/casualty sector are not taking advantage of data that already exists within corporate environments to truly understand their very own customers. Instead, their business units function in silos and fail to meet their full potential. Therefore, insurers are not connecting the value of information to the powerful competitive advantage that it can deliver.
Even in cases where property/casualty insurers recognize the value of information, very few are able to translate this recognition into action. Organizationally, the skills and approaches required to decipher information analytics, identify appropriate market opportunities, inform strategies to capitalize on those markets and monitor execution effectively are not being collectively addressed. Coordination among—and even within—business units and departments has historically been limited to non-existent.
Along with coordination, property/casualty insurers can achieve an information advantage by looking at information needs related to end-to-end decision processes, rather than through the current organizational structures. For example, an information advantage in risk management can be achieved by taking a holistic view across all “knowable” and “unknowable” risks, from micro-level underwriting to macro-level market dynamics:
Organizations that have information advantages know how to identify and optimize data from many sources and use the information in many different ways. In particular, they combine internal and external data integration; predictive analytics and econometrics; data warehousing; data visualization; layering and advanced systems dynamics and agent-based simulation to help them understand customer experiences so they can quickly act on opportunities. These actions can ultimately drive enterprisewide financial performance.
Use this information advantage as a capability across organizational boundaries, decision processes and approaches, and you will uncover the key to organizational learning, alignment and performance. By refining your strategy, you will leverage the power of information and steer the entire organization toward success.
Jamie Yoder is the managing partner of PwC's Diamond Advisory Services.
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