Much has been said
about the increased speed
with which innovation
is advancing through
the insurance industry.
As SMA reported in
“Insurers’ 2016 Strategic
the commitment to transformation within the areas
of customer experience,
analytics, new products,
and core replacement is
Projects in these
areas are being undertaken with a heightened
intensity and investments
are increasing in 2016.
Although this is great
news, insurers continue
to struggle with data
management and figure out how to glean the most useful
insights out of their vast amounts of data through the deployment of analytical capabilities.
As Sir Arthur Conan Doyle channeled through his famous,
fictional sleuth, Sherlock Holmes, “The temptation to form
premature theories upon insufficient data is the bane of our
profession.” Applicable to detective work back then, this fittingly
applies to the insurance industry today.
Diligent with Data
Insurers have diligently worked on their business intelligence
(BI) capabilities. Fortunately, those investments seem to be paying off. Most insurers nowadays have solid reporting capabilities
in place, and some even have great dashboard and visualization
options available to their leadership and teams, which enables
them to manage their businesses supported with accurate and
Energized by the success of implementing those capabilities, we see insurers jump straight into predictive analytics.
This might work, especially if those predictions are primarily
based on external data sets. However, these predictive analytics
initiatives often fail, especially when they heavily depend on the
use of internal data. I believe these failures are caused on two
factors: lack of access to timely, accurate and complete data, and
skipping a step in the evolution of BI capabilities.
Let’s start with the second factor: Insurers often miss an
important step in the evolution of BI capabilities; the “why is
this happening” step. We have become really good at reporting
Tell Me Why
Analytics have helped insurers understand what is happening, but to receive true
value from their data companies must learn why things are happening.
By Monique Hesseling
There are plenty of relatively
new technologies in the
market that can effectively
assist insurers to increase
their analytical capabilities
around the “why is this
happening” questions by
creating an environment that