ITA Pro Magazine - December 2015

Any discussion around business intelligence typically involves enhancements. Companies don’t build their database from scratch; they typically use a product from Oracle or Microsoft and then look for ways to get more out of the system.

“When we talk about enhancements to BI, we are talking
about utilizing standard tools rather than packaged insur-
ance models,” says Jeff Goldberg, vice president, research and
consulting for Novarica. “Even if you work with a packaged
insurance model you are still going to do enhancements.”
The status of the insurance
industry, detailed in a new report
on business intelligence for the
research and advisory firm, finds
there are too many siloed data-
bases from disparate core systems
either through one company
acquiring other companies or
building new databases over time
and never connecting the new
with the old.

“Insurers build reports and
report against the data, but they
don’t have a cross-company view,”
Goldberg reports Novarica found seven areas of possible
investment in BI for insurance carriers:

K Data warehouse for a central source of data

K Reporting and business intelligence

K Dashboards

K Predictive modeling and algorithm-based usage to be turned into automated insight

K Unstructured data

K The ability to move data: data cleansing or data filling.

K Data governance: make sure you have agreed upon processes and definitions.

“Any given company has one or two areas that are more mature with the others falling behind,” says Goldberg. “Everyone has something they can work on. Even though some systems build upon each other—such as how do you report without a good data source or how do you have a good data source with-

Good Intel
To develop their BI strategy, insurers need to use their data to look beyond
pricing and risk exposures.

Jeff Goldberg

out clean data. The answer is, ‘You can’t.’”

Expanding the Universe

Insurance has always cared deeply about data but primarily around actuarial modeling and risk decision-making. When you ask insurers where they are investing in data, Goldberg believes it’s almost always about pricing and risk.

“After pricing and risk, it drops off radically to areas such
as marketing, claims and fraud-severity assessment,” says
Goldberg. “I think we need to see marketing and a customer
approach become more important.”
Regulations in some states prevent price optimization,
meaning the price of a policy has to be wholly based on risk
factors, but that means data about a customer’s propensity to
buy or renew a policy is not allowed to be used to determine
price optimization.

“That means they need to do more marketing,” says Goldberg. “Just because you can’t lower a price because the policyholder is a risk of non-renewal doesn’t mean you’re not allowed to use data and analytics to figure out they are a risk of non-renewal and use marketing to get agents to reach out to those customers. We are limited to how we can use pricing to help with that process so we have to use it for marketing purposes.”

Social Media Marketing

Goldberg reports industry analysis shows that in general it’s easy to misstep with marketing in social media. Companies understand they need social media and it is part of how the