Insurance & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


03:14 PM
Steve Goren
Steve Goren
Connect Directly

INSURANCE VALUE THROUGH TECHNOLOGY, PART III -- INFORMATION MANAGEMENT: Meeting the Challenge of Compliance Through Information Management

In this, the third in a series of four articles, Steve Goren of BusinessEdge Solutions discusses the challenge of compliance through information management.

Information is at the heart of all insurance operations. We interact with information in product development, sales and marketing, new customer acquisition, business transactions, accounting, financial reporting, business analytics, and last but not least, regulatory and statutory compliance.

Insurance companies are facing an ever-increasing challenge not to just capture information about their business, but also to construct a holistic, auditable and current composite representation of the company's activities. The focus of this article will be on managing information to address compliance needs.

Information Management is the set of solutions that help corporations manage their data as a strategic corporate asset. The value of these strategic assets can be realized through an effective information management program that provides the technologies to source, cleanse, integrate and present data as actionable information.

Profitability in the insurance industry is based on the ability to accurately assess risk and manage customer relationships over time to achieve financial success. For years, insurers have leveraged massive volumes of historical data about their customers' policies and claims to assess that risk. Most insurers, if not all, have assembled large data warehouses of customer and claims information, and are now integrating other operational data sources to support strategic business processes. The insurance industry is, and has always been, a highly regulated industry, but as state and federal regulatory agencies impose increasingly more comprehensive acts with which insurers must comply, the ability to leverage information assets becomes more critical. According to Gartner, large and mid-size insurers are each spending over $2 million through 2005 to comply with the Sarbanes-Oxley Act (SOX). In addition, Anti-Money Laundering (AML), HIPAA and the Gramm-Leach-Bliley Act all require insurers to spend funds on data integration to comply with regulations. Leading insurers are approaching the need to comply by adopting a holistic view of business practices and the management of their information assets.

One area of compliance on which the insurance industry is becoming more focused is the practice of monitoring compliance to business quality sales practices by their agents. Insurers are beginning to integrate data from disparate sources to provide information about specific sales practices. But it is the integration of this data that enables the viewing of the agent's behavior, and the customer's reaction to that behavior that will allow insurers to manage and control risk better. Primary objectives for these applications include the ability to:

  • Track business activity by product at all levels of distribution including new business, shrinkage and product surrenders
  • Monitor replacements of products to mitigate the risk of violating the statutory requirements
  • Monitor the suitability of product sales based on pre-defined criteria
  • Monitor how the agents are being supervised, including training
  • Monitor customer complaints
Insurers should plan initiatives that will not only provide the ability to monitor this information, but to act upon it through analytical tools that facilitate the management of action plans for agency improvement. By capturing relevant sales practices data on a monthly basis, insurers can monitor trends over time that facilitate the establishment of actionable "Early Warning Indicators."

Best practices that should be followed when implementing an Information Management solution to address business quality compliance are:

  • Develop a data architecture that is flexible and can accommodate changing business needs without significant reconfiguration
  • Capture data at a granular level to enable effective monitoring and support drill-down analysis from summary level information
  • Provide measures for each risk area for the current three reporting months, year to date, and rolling 12 months at all distribution levels to enable short- and long-term trend analysis
  • Store static snapshots of the data so that it may be viewed or re-run at a later date with a picture of the data as it looked on the date it originally ran, facilitating comparison with current data
  • Develop the capability to adjust thresholds for warning indicators
  • Provide a comprehensive set of detailed reports that allow the user to drill down to details from summary-level information
  • Design flexible reports so that future enhancements can be easily integrated without significant additional cost
  • Always involve the information users early in the reporting design process to ensure that the reports will be intuitive and easy to use
Steve Goren is an Information Management Specialist at New York-based BusinessEdge Solutions with more than 19 years of experience developing large-scale Data Warehouse, Business Intelligence and CRM solutions.

Register for Insurance & Technology Newsletters