For many insurance carriers, their data is a lot like the old Abbott and Costello baseball comedy bit, “Who’s on first; what’s on second.” Unlocking the mystery of the data can be almost as exhausting as following the positions on Bud
Abbott’s make believe baseball team.
The use of data by insurers runs the spectrum from least
sophisticated, with dashboards and business intelligence tools, to
state-of-the-art, such as transactional data and the emerging collection of data from social media, the web, and all the communication
tools that make up what is being called the Internet of Things.
At Glatfelter Insurance Group, data is king, but unless it
is good, clean data and easy access, working with it presents
challenges for actuaries, some of the heaviest users of insurance
data, according to Jim Partridge, senior vice president, operations, and chief actuary for Glatfelter.
Partridge works closely with Glatfelter’s IT department to ensure any new program or products that are rewritten—which could
affect both what the actuaries do and the data passed from the insurer’s front-end systems—the actuarial department is involved in
the discussion to make sure the data elements are coded correctly.
The actuarial department uses data in two ways, according to
Partridge. With Glatfelter’s wholesale programs, the actuaries are
responsible for creating, programming, maintaining and distributing what the insurer calls its corporate monitoring reports. The
actuaries maintain reports for senior management on key statistics
ranging from account retention and production, to loss experience.
The second area of responsibility for the actuaries is to be sure
any rates being charged to policyholders are adequate at every level,
which means deep analysis of the company’s experience.
“In order to do that appropriately we have to have good data,”
says Partridge. “When I came here, the company had just finished
building a data warehouse. It’s been tweaked and restructured since
then, but it works well and the data we have is clean.”
In its recent data report, Strategy Meets Action asked insur-
ers the level of maturity of their data management, according to
Denise Garth, co-author of the report and a partner in the research
and analysis group.
“There are a lot of P&C insurers—over 55 percent—that are
basically at an ad hoc level with their data, lack organizational
awareness or are operating in silos,” says Garth. “Those that have
more organized data with an enterprise level strategy, are at 24
percent. Some carriers are moving into the strategic area, but we
didn’t find anyone at the transformational or innovative range. Life
and annuity companies appear to be moving more rapidly into the
strategic transformation and innovative master range.”
Despite the hype around data and analytics, Garth points out
there remains a challenge around data mastery, which will lead into
some of the more sophisticated areas of data analytics.
“With the explosion of data, it’s going to put pressure on carri-
ers that don’t have a data mastery strategy in place,” she says. “They
are going to be competitively hindered.”
The problems insurers face trace back to a familiar industry
issue: systems conversion. Legacy systems are costly to main-
tain, which forces carriers to perform migrations. Many legacy
systems are COBOL based and finding COBOL programmers
to maintain the technology gets more difficult each year.
“The new generation of IT programmers is not interested in
COBOL,” says Dan Colarusso, CEO of the consulting firm The Co-
pelind Group. “Utilizing data governance is the best way to manage
this significant challenge and from what we see carriers view this as
a positive approach for data management and a way to maximize
the return on their conversion costs, which are significant.”
Whether it’s a policy administration system or a financial
reporting system, carriers are forced to move away from these
systems because they have lost the talent and expertise to run them.
Colarusso believes this is more of a challenge for the midtier at this
“Larger carriers have adopted methodologies to help them
through the process,” he says. “It’s probably quite new for midtier
carriers. They don’t have huge IT departments to manage poor-
ly-captured data. Larger carriers have that quality control.”
When insurers begin a data migration program, data mapping
is the first challenge, explains Colarusso. Whether it is customer
data, addresses, names, it can be quite complicated because over the
years the data might get changed. Data governance gives them a
proven methodology to make sure once they have the data in good
shape they can maintain it going forward in a standardized process.
Data governance requires insurers to focus on quality.
Making the Right
Without a data plan in place and governance to assure they never slip
again, insurance carriers struggle to find the answers to even the most basic
questions about their customers and their business.
By Robert Regis Hyle