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.

Data & Analytics

12:47 PM
Kathy Burger
Kathy Burger
Connect Directly

As Insurance Industry Leaders Embrace Data, Should CIOs Worry?

As insurance business executive recognize the value in being able to access and analyze risk and customer data, the pressure is on IT organizations to deliver -- but that's not necessarily a bad thing.

There wasn't much news or surprise in the presentations at this week's Property/Casualty Insurance Joint Industry Forum in New York. As would be expected, the panelists -- a mix of industry analysts and insurance company CEOs -- generally don't like regulation, are concerned about the economy, and are looking for new avenues for growth. One theme that did emerge that should be encouraging (and maybe a little concerning) for insurance IT professionals is the evolution of risk management and the importance of having access to quality data in improving insurer risk management efforts. It might seem to be an obvious connection, but such widespread recognition of the value of data in driving the business has only come about in recent years.

[Find out about what members of Insurance & Technology's Reader Advisory Board are planning around next-generation analytics for 2012.]

"The more data we have the better we are," declared panelist John M. Huff, Director of the Missouri Department of Insurance, Financial institutions and Professional Registration. Noting regulators' growing focus on data, Huff noted that the National Association of Insurance Commissioners (NAIC) has made significant investments in data collection, adding, "I hold my head high about our data collection capabilities. Looking to use that data more effectively is where we should be going."

Liberty Mutual's president and CEO David Long noted the need companies such as his have for "better data and analytics on the aggregation of commercial risk."

Of course, when top management takes an interest in something technology-related it can become a "be careful what you wish for" situation for CIOs and their teams. It's easier to make the business case for investing in analytics and data management solutions, but there's also a lot more scrutiny and expectation for deliverables. Besides the obvious risk management and compliance benefits gained by companies that are adept at managing and leveraging data, there are other huge implications around security, roles/responsibilities and infrastructure that have to be addressed.

Still, IT executives should expect to get more pressure from their bosses to find ways to use analytics and information in general to drive growth. Ernst & Young includes in one of a list of five strategies P&C firms should adopt to succeed in 2012 "Apply business analytics to address difficult top-line growth conditions." In a press release, the firm elaborates:

"In this uncertain economic environment, insurers that apply business analytics across the value chain can glean deeper information on customer markets, underwriting segment profitability and claims management. These insights can then guide both strategy development and execution. More refined business analytic tools are no available to insurers and there are more external data sources to feed into the models, promising much deeper analysis for decision-making purposes."

The other steps, as defined by Ernst & Young, are:

  • Execute flexible approaches to manage uncertain conditions.
  • Anticipate, understand and address the impact of prospective regulations.
  • Comprehend and act upon changing insurance buying behaviors.
  • Increase investments in core systems to bolster growth and profitability.
  • As with the discussion at the P/C Joint Industry Forum, nothing new or surprising in these recommendations, which I would hope already are principles that any insurance company would embrace. However, for insurance IT executives who are promoting and leading a variety necessary but challenging and costly initiatives, it never hurts to get some validation.

    Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

    Register for Insurance & Technology Newsletters