Good Governance Goals
The value of data for insurance carriers has never been greater and, unlike many investments, its value
will always remain high. There is one thing that can bring data down, though, and that is ineffective
governance. The brightest carriers have figured out how to effectively employ a data governance
program and here are some tips on what those best practices can offer. Addressing this important
industry issue are: Michele Goetz, principal analyst serving enterprise architecture professionals for
Forrester; Karlyn Carnahan, research director for Celent; and Kimberly Harris Ferrante, vice president and
distinguished analyst for Gartner.
What Do You Think?
This month’s question:
What is one best practice that you have seen involving data governance
that can be beneficial for most insurance carriers?
Think about the business outcome first
and data second.
Data governance is
effective when it is
addressed to specific
business expectations over dogmatic
Business decisions and processes establish specific context to use
information. Each has its own set of
expectations and policies. Standardizing
to a single data governance standard
across the organization limits corporate
insight and knowledge by restricting
What this means for insurance
companies is they need to build data
governance programs that support a variety of business objectives—efficiency,
risk, growth, and strategy. Claims needs
information that distributes funds appropriately and circumvents fraud. Marketing and sales want to grow accounts and
cross-sell and up-sell products.
One perspective cares about accounts, the other about individuals,
households, and company structures.
Policies for data quality, security, privacy,
and data life-cycle take on different
meaning for these two equally important
As the insurance
industry moves into
a more data-centric
world, data governance becomes more
critical for assuring
the data is consistent,
reliable, and usable
Analysis and reporting issues are more
often related to data governance issues,
not technology issues. However, carriers face governance challenges. Data is
spread across a wide variety of applications and data ownership is most often
shared across the business and IT. Carriers
report cultural resistance to understanding
data issues, which makes it harder to find
sponsors for data governance initiatives.
Consequently, a large number of carriers
deploy informal data governance initiatives—especially larger carriers.
I recently conducted a survey on data
governance asking which initiatives
drive the most value. CIOs report data
quality initiatives drive the most value
for carriers, with 56 percent saying they
are getting significant or some value.
CIOs also report that data governance
councils are driving significant value.
The question is: Is this wasted investment if wider governance is not in place
to keep it clean?
Focus on data
continues to grow
as insurers leverage
data to optimize
and find greater val-
ue from their data
in BI, analytics, and
Big Data are rising as a result.
However, most insurers lack proper
data governance to set the foundation
for these projects. This may start with
building a corporate culture for data
mastery. Insurers should build enter-prise-wide understanding on the value
and application of data, especially in light
of emerging digital business models.
The creation of a data governance
council and the appointment of a leader
are key characteristics of successful
governance programs, as well as establishing policies that cover structured,
unstructured, and emerging data types.
Guidelines for data collection, storage
and use need to be created, taking into
consideration regulations over data use
and industry standards such as ACORD.
The key to data governance success,
however, is the establishment of authority and recognition of the importance of
governance. Without this, governance
programs will fail.