The use of anlaytics to understand data is clearly a hot topic in the insurance community these days. Those who have not taken steps to begin to use analytic tools are being warned that they are behind the curve already. A recent white paper notes that successful implementation of an analytics program is a non-trivial exercise that involves multiple, interconnected activities, impacting most if not all parts of an insurance enterprise.
Our questions to you: Are you using or planning to use analytics and how will this impact your business?
What’s the big deal?
In the opening days of 2012, we identified data and analytics as a ‘megatrend’ for 2012, writing: “As the soft market continues, leading insurance underwriters and distributors are pursuing intelligent data use as a high-priority competitive strategy.”
The significance of this trend was reinforced recently at the Insurance Brokers Association of Ontario (IBAO) Annual Convention, during the CEO panel. As reported in CanadianUnderwriter.ca, Maurice Tulloch, CEO of Aviva Canada, said that other industries are “using analytics way more advanced than what we’re using, ” and added, “I want everyone in this room to better compete. It (analytics) allows us to get proper pricing so that people actually get the right price for the right risk.”
If analytics are so good, where to I get them?
You probably have a lot of the data, and can get access to the rest for an anlaytics implementation. What you might be missing is how to get the information out of the data.
What Does Big Data Really Mean for Insurers?, a recent white paper authored by SMA-Strategy Meets Action, and distributed by SAS, notes that the use of analytics requires a disciplined approach that involves 3 interrelated capabilities.
Two of the three components do not relate to technology, per se. Some of the elements you can buy, some you have to develop. All of the component need to be controlled. The white paper provides an excellent, business language description of each capability. The following are excerpted from the white paper:
Master Data Management (MDM): “Data must be seen as the valuable corporate asset that it is, and be supported by comprehensive master data management (MDM). Good MDM consists of processes and tools to manage enterprise data, such that a high quality, consistent, and authoritative source of data exists. While MDM can be applied at the business unit level, the maximum benefit is gained when MDM is applied across the enterprise.”
Technology platform: “What sets specialized high performance analytics platforms apart from the general- purpose systems is the ability to ingest billions of data records (representing terabytes of data), conduct sophisticated analytics, and produce a result in hours or minutes.”
Centre of excellence: “The third leg of the stool is an analytics center of excellence, bringing together advanced technology skills and experience from inside and outside the organization. Insurers need to acquire, develop, and partner with individuals that have deep analytics talent. Understanding how to plan, implement, and interpret the results from high performance analytics programs is the key to success – and it requires experienced people.”
So, what’s your take?
SMA’s analysis suggests that proper implementation of analytics is a non-trivial, multi-faceted undertaking. The CEO panel agreed, noting also that the sales agents (brokers) must be prepared to interpret the use of analytics to customers in everyday language.
Our specific questions to you are: 1) Do you see the need to use analytics in your business and 2) If so, what are your experiences, and 3) If not, what is your alternative?
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