Insurers large and small catch up with data's value

Insurance carriers large and small are looking for ways to use the wealth of data they have to better support new operations technologies.

In the second half of last year, Rich Pluschau, CIO at Falcon Risk Services, an MGA that had its customer relationship management spread out over various systems, began implementing a new policy administration system for new claims, an illustration system, a general ledger finance system, a data warehouse and a predictive modeling and analytic environment.

Pluschau found that every one of these systems is critically dependent on data. 

“Insurance companies have more data than just about anybody else,” he said, speaking at a June 4 session hosted by Celent preceding the Insurtech Insights conference in New York. “So in order to be successful there, really it was having to take a step back and understanding what we have today, where we want to be tomorrow, and how do we build up that appropriate architecture, modeling environment, and all the recursive integrations throughout the multiple insurers and claims and all these lifecycles to actually implement that successfully.”

Smaller insurers, however, can only make limited investment in improving data operations, and marshaling in-house expertise, according to Pluschau. “The margin of error that you have to work with is really small,” he said. 

Large carriers that are able to improve operations can invest in certain capabilities to become more “data-centric,” said Bruce Broussard, managing partner at the Percipience consulting firm, at the session, citing client ICW Group, a carrier offering workers comp, earthquake and auto insurance, as an example. 

“They have invested in metrics and tracking, so they understand where they’re using data and where they’re not,” he said. “Some underwriting groups are being fed different pieces of information. ICW is tracking the results of those things so it can evaluate the benefits, and then continue to invest in areas where the return has proved to be sufficient.”

These investments still need a consistent operations environment, and data dictionaries help support that, according to Broussard. Units within large insurers may use the same terms for different things.

“When you start trying to look at things at an enterprise level and really assess performance of different aspects of the business, if you don’t have consistent terminology, that is consistently understood and used, it’s very difficult,” he said.

The future of using data in the industry is unclear, according to Broussard. “What you can know is whether you’re putting in place infrastructure and investing in a data solution that has the ability to expand and grow with you,” he said.

If insurers don’t understand the measurements and modeling of data, according to Pluschau, they should at least be engaged with the leaders of their business to understand their operations strategies.