3 Ways Insurance Benefits From a 360 View — and Why That’s Hard to Do

Risk, client retention and business acceleration through operational efficiency are the three most pressing issues facing the insurance sector – and are actually stymied by the same challenge: No 360 view of the truth.

With data widely spread across silos (CRMs, policy & claim management systems, billing systems, EDM, Web, social), it is often duplicated, aggregated and transformed. There is no unique source of truth and data lineage is not managed properly. And yet, the punditry declare that “data integration” is the elixir to serve all needs regarding customer knowledge and management, marketing, sales, operational excellence, quality of service, prevention and risk management.

But a McKinsey survey regarding enterprise risk management in insurance, published in July 2016, found that one-quarter of respondents cited “data governance and quality” and another quarter cited “automation and speed of data gathering” as their initial improvement priorities. Before using data, you have to validate and centralize it — and that is where the industry gets bogged down.

A data executive from a billion dollar insurance firm in the US confided in my colleague that projects were on 24-36 months. Changing data sources, changing business needs would immediately reset the clock on progress. Executives have no stomach for such delays.

This requires a different approach – an operational data hub providing specialized 360° views based on exact same consistent, relevant, accurate and trustable data – the golden record.

The goal of these 360° views is to help business users to take the best decision or to push the best offer at the best moment by providing all available information and insights, whether they come from operational structured systems, emails, tweets or documents.

How Insurance Benefits From a 360 View

Customer 360 Insurance companies have always been focused on their customers. However customers no longer behave in the same ways they used to. The explosion of digital channels has dramatically changed how you Reach, Engage and Delight your communities. Customer Experience is the new battleground as firms strive to differentiate themselves from their competitors, create loyalty and ultimately increase profits.

Customers now dictate which channels they engage through, so it’s paramount that organisations respond swiftly and appropriately. Old, policy-centric business processes keep your customers at arms-length. Field adjusters, partners, and customers want mobile apps and relationship-enabling capabilities, but these are costly and complex to implement with rigid legacy infrastructures. The threat from non-traditional insurance entrants has never been greater.

How do you have a single, consistent – and persistent – relationship with a customer who engages with you across multiple channels?

In order to effectively engage with customers, Insurance companies need to bolster their technological capabilities, which would be able to perform a number of functions in a cost-efficient manner, such as:

• Integrate customer data from silos into a 360 view
• Ensure security controls are in place, especially in light of the coming EU GDPR regulation
• Enable powerful search across all data types and emerged social media channels to produce meaningful sub-second results
• Scale up and adapt to an ever-increasing volume and variety of incoming data
• Reduce the manual work so that your employees can focus on value-added activities

Risk 360 Insurance is a business of managing risk – but you can’t accurately calculate your risk if you can’t effectively access and use all your data because it’s tied up in data silos. This threatens both your margins and your competitive position – and leaves you vulnerable to compliance issues as well.

According to McKinsey, leading insurers are retooling the role of their risk function from incident response and compliance to an essential partner in advancing the business strategy. For instance, firms are looking to better track and understand health underwritten risks by integrating flows coming from partners and tens of operational silos — in real-time.

They are also looking at Geospatial capabilities in order to help actuaries and technical direction visualize hot spots and risk distribution. Risk management has to become holistic, dynamic and preventive, and needs all available data, including history and documents.

Operations 360 Insurance organisations are largely siloed organisations where various departments rely on disjointed legacy systems and manual processing. This is mainly the result of 40+ years of internal IT development, starting with mainframes, relational databases, SOA architectures, 3-tier packaged software, web portals, data warehouses and data marts. Additionally, insurance firms are traditionally organized by lines of business. That means applications are duplicated in each business silo to serve P&C, Pension, Savings or Protection activities. Further, M&A turned insurance companies into incredibly complex organizations, suffering from multiple migrations and affecting data quality and completeness, systems’ maintainability and scalability.

In the meantime, research shows that firms can achieve huge cost savings, boost their profit margins and revenue growth by creating technological synergy across functions and business verticals.

A recent global research by MIT’s Sloan Center for Information Systems Research quoted in WSJ found out that firms that “share business technology across units and departments grow faster and have lower costs than rivals that don’t do it as much. By taking advantage of what they already do well, these firms can devote more energy to real innovations.”

Reusability of technologies presents a unique opportunity to enable a 360 view on your operations. And yet it’s clear that a different stack of technologies is necessary.

Why a 360 View Is Hard

Pulling data from all these silos is extremely complicated, costly and long to build central data warehouses to have such a golden record due to physical model conception and ETL processes. And as soon as a source changes or a new source has to be integrated (which happens several times a quarter) the data model needs to be redefined. And semi and/or unstructured data – contracts, texts, social media — are out of the scope with traditional RDBMS approaches. One firm’s IT exec told us that a schema change could be an 18-month project. That’s 18 months delay to getting product to market. And this is exactly what insurance companies are struggling with – bringing new products to market and catching up with digitally-demanding consumers.

Solving the data challenges – and subsequent development lifecycles – just can not be ameliorated with current technologies. The stability and lure of RDBMS is its rigid structure, the very characteristic that is bogging businesses down.

In the next blog we will look at how to create an operational data hub on an Enterprise NoSQL database to finally provide that golden source of truth – and an actionable 360 view across all demands.

Hannover Re: Improving Business Insights and Customer Service With MarkLogic 35-min webinar that describes how Hannover Re is improving efficiencies and gaining a 360 view on their assets.