Six ways to improve business intelligence in Insurance


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Many insurers are still struggling to achieve a 360-degree view of their customers. A primary reason is that senior executives are unaware of the opportunities their business intelligence systems can provide.

Despite their hefty and increasing investments in data warehouses, architectures, analytics, and business intelligence (BI) platforms, many insurance companies still are not getting the value they want, and need, from their BI initiatives.

In essence, past business intelligence initiatives in insurance amounted to the status quo: simple spreadsheets.

For insurers to achieve the desired ROI from large BI investments, they will need to tweak their programs to provide the right information to employees in a timely manner and in a format that helps them analyze, evaluate, and react to changing market conditions to drive business results.

Published in: Business

Six ways to improve business intelligence in Insurance

  1. 1. Accenture InsuranceReaping the Benefitsof AnalyticsSix Ways to Make YourBusiness Intelligence Smarter
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  3. 3. Gartner research shows that manyinsurers are still struggling to achievea 360-degree view of their customers,and part of the issue they aregrappling with is the completeness orthe accuracy of the data they haveon customers across their variousrepositories.1Despite their hefty and Despite the focus and investment, insurers saw little change; the same huge,increasing investments bulky, flat report outputs from the old systems were simply migrated to the newin data warehouses, systems. As a result, carrier informationarchitectures, analytics, remains disjointed, conflicting, slow, and backwards-looking. Executives andand business intelligence managers continue to be overwhelmed by(BI) platforms, many ominous reports. They have a hard time deciphering what the information meansinsurance companies still relative to business change. They either have too much or too little information,are not getting the value rarely at the point of need, and never withthey want, and need, from the ability to truly drill down and analyze the root cause of an issue. For example,their BI initiatives. one national carrier produces more than 500 pages of reports which are dutifullyOver the past 10 years, insurers have printed and distributed to executivesspent hundreds of millions of dollars on each month, but provide little insightdata warehousing and BI. One of the to the management team on where toprime areas for insurer’s IT investments focus their efforts. Insurers moved fromfrom 2010 to 2011 was in data data gathering to data reporting, but stillwarehousing; half of the 29 property- are not getting to the insight and actioncasualty executives surveyed by the Ward promised by BI.Research Center indicated they werebudgeting more money to better house In essence, past business intelligencetheir data.2 initiatives in insurance basically amounted to the status quo: simple spreadsheets. 2
  4. 4. Despite the importance of BI, Gartnerpredicts that, “through 2012, morethan 35 percent of the top 5,000global companies will regularly failto make insightful decisions aboutsignificant changes in their businessand markets.”3The half-met promise of BI First, the emphasis of BI initiatives was on the technology rather than the real Third, BI was viewed as an IT project, guided and controlled by the ITThe promise of what business intelligence business asset: information. To extract organization rather than the enterprise.would bring to insurance is starkly value from their large amounts of Without an understanding of whatdifferent from today’s reality. Carriers customer data, carriers need an integrated is possible through new BI systems,were supposed to have accurate data that and governed approach to improving executives on the business side didwould be: data quality and conformance. Without not inquire about the reporting, the right processes and operations, the analytics and intelligence potential. This• Easily accessible and shareable to all. technology simply enables low-quality “accountability” gap fostered a lack data to be gathered and displayed of governance, a failure to effectively• Very specific, drilling down from more efficiently without the benefit of conform sources, and poor data quality. summary to individual transactions. improving business. The situation is exacerbated by multiple policy, claims, billing, and other legacy• Actionable information, providing Second, design of the new BI systems systems. It means that, today, the insights on where and how to improve replicated the same segmented, isolated business is not using the tools now business results. reports already being used by department- in-hand to shift from a tracking to an specific users instead of emphasizing analytics focus.• The foundation for data-rich solutions enterprise-wide insight. While user- across the enterprise, helping to manage specific reporting is useful, the true power of innovative enterprise information brokers, customers, and operations. capabilities lies in the ability to alignSo, how is it that carriers, supposedly with and analyze information with commonbetter data and systems, are still only definitions across the enterprise—givinggenerating static spreadsheets that offer executives broad operational views andlittle insight and impact on the business? a better understanding of performanceThere are three primary reasons: from every aspect of the business to make more intelligent decisions.3
  5. 5. Figure 1. How holistic business intelligence delivers competitive advantage. Optimization–“What’s the best that can happen?” Predictive modeling–“What will happen next?” Predictive analytics Forecasting/extrapolation–“What if these trends continue?” (the “so what”) Statistical analysis–“Why is this happening?”Competitiveadvantage Alerts–“What actions are needed?” Query/drill down–“What exactly is the problem?” Descriptive analytics Ad hoc reports–“How many, how often, where?” (the “what”) Standard reports–“What happened?” Sophistication of intelligenceSource: Competing on Analytics: The New Science of Winning (Davenport/Harris)Taking a holistic view of • A claims professional who can see a vendor’s expense, customer service, and Given today’s growth andthe business loss outcome information for a specific advances in analytics, BI region and type of service.The promise of BI has not faded. Given is even more compellingtoday’s growth and advances in analytics,BI is even more compelling now as a This is the real promise of BI, translating now as a way for insurers insights into action and empowering theway for insurers to incorporate business business to act differently (figure 1). By to incorporate businessinsights into business processes and having both accurate data and analyticalopen up their growth potential. Insurers prowess, insurers can determine the insights into businesscan use BI throughout all aspects of theorganization, giving employees greater impact of a situation on their business processes and open up and devise appropriate ways to respond.insight to improve performance. Consider: And, they can push these capabilities to their growth potential. every line professional in the company.• Distribution professionals who are able They gain a holistic view of enterprise to walk into a broker’s office and have operations—from product development at their fingertips information on broker and claims analytics to fraud detection performance, upcoming renewals, and financial compliance—to change and business that the carrier lost the year run their business better and to equip before, and market data for the region. everyone in the company to do the same.• A commercial underwriter who, when evaluating a risk, can see the performance of the risk, the performance of similar risks in an industry and geographical area, and pricing trends.• A customer service professional who has access to a customer’s full account information, including profitability, claims, and service history. 4
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  7. 7. Figure 2. Components of a top-quality managed data lifecycle Data monitoring Data discovery Data profiling Data cleansing Data enrichment Data stewardship Data compliance Data governanceSource: Company reports, Accenture ResearchThe bottom-line is clear: for insurers to Predictive analytics, for example, is one • Would a skills-based routing forachieve the desired ROI from large BI such enabling capability. According to 89 underwriters make sense, and if so,investments, they will need to tweak their percent of insurance executives surveyed what does the performance informationprograms to provide the right information by Accenture, customer acquisition and tell me about how to respond withto employees in a timely manner and in a retention over the next three years will respect to size, industry, geography, orformat that helps them analyze, evaluate, depend heavily on their ability to deliver coverage for a given risk?and react to changing market conditions customized experiences to their differentto drive business results. It means infusing customer segments4—an ability that will • How do I get the most return fromgovernance, monitoring, and compliance rely on predictive analytics to convert distribution spend? Is there morethroughout the managed data life cycle data into usable insights on customers, opportunity with brokers located in(figure 2). It means having well-designed agents and markets. When applied to cities or in rural areas?reporting outputs that offer holistic views insurance distribution, predictive analyticsof data with appropriate drill-down and helps insurers determine which customers • Who are the best claim vendors from aintelligence. When married with detailed offer the best growth opportunities, customer service and loss perspectiveplanning data on expected results, such which markets they should focus on and for a given loss profile?capabilities can be very powerful in giving which agents they should hire and deploy • Which of the litigators are best for aexecutives insight to make key business to improve business performance. given type of loss or industry?decisions, such as: Historically, predictive analytics• What is the real rate change I am in insurance has focused on risk Successful insurers will realizing from the recent segmentation or pricing. However, it has pricing changes? far broader uses for insurers; it can be become a more data- applied to key operations of the business• Are my rate changes adequate for a to optimize performance in every area. For driven, measurable and given industry? example, predictive analytics can answer transparent marketing key questions in moving from analysis to• Are the claim notices for my new lines action, such as: organization with strategy, following my actuarial predictions? tactical campaigns and• Where should I be having my budgets that are based on underwriters focus for submissions? metrics and analytics.5 6
  8. 8. Thanks to new BI capabilities, newinformation at a large P&C insureris now available daily instead of inmonths, and with better access. Userscan spend their time analyzing data andunderstanding its implications ratherthan collecting and formatting it.Six ways to mine gold in the 2. Establish core governance to manage an increasing number of technology values and definitions. The right requests from the marketing department.last BI mile governance, with common language and This central team drives technologyTo gain more insight and value from their terms, provides for higher data integrity evaluations based on the needs,BI investments, insurers will need to go and useful insights. Most carriers strategies and requirements of thefurther toward the holistic view by taking business, essentially eliminating the recognize the importance of an enterprisesix key actions. scenario where one department invests Data Dictionary, Data Stewards and Data in a point solution that cannot integrate Governance Council initiatives to support into the corporate infrastructure.1. Establish a core set of data most data governance, however only 27 percentrelevant to the entire enterprise. have these in place and more than 40 3. Start controlled clean-up efforts.Establishing this core set of data iscritical for several reasons. It prioritizes percent have no plans to introduce such While insurers are often data rich, theythe data requirements of the BI solution, initiatives over the next 12 months.6 also have a lot of data quality issues.provides direction on where to focus any Controlled data management goes beyond Insurers need to do some clean-up ofdata remediation activities, and provides just governance, however. It includes the existing and historical data in parallela focus for where to start to implement active, ongoing quality evaluation and with instituting data managementend-to-end data management solutions. management of critical data to ensure solutions to improve data quality. ThisSuch solutions include the use of tools that governed information remains of the type of clean-up should be driven by theand governance to ensure that the highest quality, aligned to consistently importance of the data and the ROI ofenterprise produces a consistent set of conformed standards. the clean-up. For example, a clean-uphigh quality, standards-conformed data effort to improve customer data and,for ongoing analysis and consumption. According to Brian Pagano, Chief IT perhaps, years of customer history, couldIt also makes certain that the BI focus is Architect at Guardian Life, the fourth be very valuable. Fixing old underwriterenterprise-wide rather than being slanted largest mutual life insurance company in information, on the other hand, mighttoward a single information user, such as the United States, governance extends be less useful and warrant less of anactuary or finance. This action is complex beyond a decision-making process, and investment (if any).given the array of systems and diversity of must be at the core of every corporateinformation users that insurers typically process. Guardian Life implementedemploy; still, it is critical to the usability an enterprise level unit that is chargedof the data for BI solutions. with evaluating and acquiring new technologies, and has admitted to fielding7
  9. 9. 4. Rapidly develop tools for business 5. Embed intelligence into reports. that highlight business issues that needuse. Analytics-based tools can help Rather than simply displaying information, attention with enough detail to betterinsurers more easily conduct data reports need to be intelligent enough understand and resolve them. In essence,analysis and mining to identify metrics, to highlight areas that need executive holistic BI gets managers closer to thetrends, interrelationships and anomalies. attention. This action requires insurers business problem in need of a solution.Internet-enabled scorecards, dashboards, to first explore with a fresh and open For example, business leaders with onlyreporting and interactive analytics perspective how best to use information submission information may see thattools are being incorporated into many to improve their business performance. business is down from the previous year,insurance processes, such as the front What information do you need to know; but not understand why. With advancedoffice, claims or customer relationship what does the business care about? reporting tools that analyze and evaluatemanagement. Advanced tools that can What metrics and benchmarks will tell the information across regions, products,analyze both structured and unstructured you whether your business is running at brokers, and underwriters in a dynamicdata in real time help insurers better high or low performance? How will you fashion, executives can discover that thepredict behavior and take action ahead of interpret, for example, if the number root cause of problem is tied to a singlean incident, such as in the detection and of claim occurrences is higher than the broker where the underwriter handling theidentification of insurance fraud. actuary predicted? Insurers also need to relationship recently left the company. establish parameters to identify issues This insight would then help point to aOne analytics tool that can improve and trends, employ intelligent graphics strategy to resolve the issue.agent performance is the Accenture for multi-dimensional analysis, andHigh-Performance Sales Force Analyzer, train managers to interpret the reports Make your businesswhich can give insurers a detailed profile to determine the right action to take inof the specific characteristics of their response to the insight. intelligence smarterbest agents on a territory-specific basis. With business taking the helm, insuranceInsurers can use this profile to hire 6. Build solutions that offer broad companies have a significant opportunityand retain high-potential agents who and granular insight. Insurance and somewhat of an obligation to tapmatch the profile, as well as establish executives need to be able to look the untapped last mile of businesstraining and performance management at the enterprise-level picture and intelligence. There, insurers’ hugeprograms that encourage and enable then drill down to lower tiers of amounts of data can be filtered throughall agents to emulate the behaviors, granularity as needed. The big value of sophisticated analytics to enable fasterattitudes, and attributes of high BI is gaining access to information decisions, concrete actions, betterperformers within their organization. business operations, and growth. 8
  10. 10. The Accenture Business IntelligenceSolution for InsuranceTo help insurers move toward high performance, Accenture InformationManagement Services developed the Accenture Business Intelligence (BI) Solutionfor Insurance—an integrated suite of applications that meets insurers’ need forbusiness intelligence, from raw data metrics to detailed what-if analytics. Thesolution integrates fully with industry-standard systems; it is built on the BusinessObjects platform, and will be made available for other platforms such as SAS,Cognos and Microsoft. The Accenture BI Solution for Insurance consists of fourcore components:• Enterprise Metrics Management (EMM)—a unique offering encompassing the strategy, process, and technology components needed to ensure quick access to appropriate and consistent performance metrics via tailored, rules-based executive dashboards.• Reporting—providing insurers with comprehensive reporting capabilities based on Web intelligence reports that drill down to the enterprise metrics and provide detailed, flexible real-time intelligence on the company’s performance against any chosen indicators.• What-If Analytics and Scenario Planning—sophisticated modeling capabilities that enable performance data drawn from the EMM and reporting modules to be tested and trailed against changes in any chosen combination of variables. This allows executives to model, in advance, the impact and interdependencies that would arise from any given management action.• Insurance Data Migration Factory—this unique facility specializes in doing one thing effectively; transfering data from aging systems to new BI systems. Once converted and cleansed, insurers can then analyze information across multiple platforms and tools. The Factory has conducted more than 80 conversions and migrated more than 45 million policies and accounts.Putting Business Analysis to workThe Accenture BI Solution for Insurance operates through an accessible, user-friendly graphical interface, with clear and consistent use of dashboards, charts,and colors. All three of the core elements—EMM, reporting and analytics—areintegrated in a single solution, with seamless and interlinked use of the sameperformance data across each application.By combining Enterprise Metrics Management, reporting, and what-if analytics,insurance companies have a cost-effective and easy-to-implement solutionencompassing all the elements needed to support better decision-making andachieve high performance.9
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  12. 12. About the Authors About AccentureAnthony Rjeily is the Managing Director Accenture is a global managementfor Accenture’s Management Consulting, consulting, technology services andAnalytics and Interactive practice outsourcing company, with more thanin Financial Services North America, 249,000 people serving clients in morehelping clients reinvent their business than 120 countries. Combining unparalleledand operating models, develop winning experience, comprehensive capabilitiesanalytics and digital capabilities through across all industries and business functions,transformational change programs. and extensive research on the world’ most successful companies, Accenture collaborates with clients to help themMichael F. Reilly is a Senior Manager in become high-performance businesses andAccenture’s Insurance Practice. He has governments. The company generated nethelped leading insurance companies to revenues of US$25.5 billion for the fiscaltransform operations and organizations year ended Aug. 31, 2011. Its home page isaround the world including the US,, Demark and Sweden.michael.f.reilly@accenture.comReference1 Gartner, Inc., “Market Trends: No Escaping BIand Analytics in Insurance in 201,” by Derry N.Finkeldey, Dan Sommer , June 30, 20112 Ward Research Center, “IT Spend: The Focus in2011,” January 20113 Gartner, Inc., “Five predictions for businessintelligence (BI) between 2009-2012,” January20094 Accenture, “Transforming Distribution andMarketing with Predictive Analytics,” April 20115 CMO Council and Accenture Interactive,CMO/CIO Alignment Imperative report, Novarica, “Business Intelligence In Insurance:Current State, Challenges, and Expectations,”November 2010Copyright © 2012 AccentureAll rights reserved.Accenture, its logo, andHigh Performance Deliveredare trademarks of Accenture. 12-0809