What Chartis' New Chief Science Officer Role Means to The Insurance Industry

By appointing Murli Buluswar chief science officer Chartis did not merely create a new and somewhat perplexing job title for functions that already exist but signaled the emergence of a new paradigm of insurance processing and decision-making. By elevating the analytics function to the corporate level, Chartis has set a precedent for the shaping of a truly data-driven insurance enterprise, one that competes on the basis of rigorous data analysis.

The use of the word "science" in new role shows that Chartis is serious about rigorous application of data -- a worthwhile emphasis for any financial services company in the wake of the financial crisis, and in particular for a major business unit of AIG. But there is a certain irony in the title also, in that the new position is largely about creative approaches to using data, which is as much intuition and art as it is about science.

As Chartis CEO Peter Hancock describes the new office, it is designed to "enhance our focus on analytics, asking the right questions, and making science-driven decisions about our strategies -- whether related to underwriting decisions, product innovation, pricing, distribution, marketing, claims or customer experience -- with the end resulst of improving the scope of what we deliver for customers." Hancock relates the office's work to advances that will "improve people's lives and safety through the application of insurance," and thus enhancing the industry's reputation.

The position emphasizes the acquisition of solid data through its responsibility for creating what a Chartis statement characterizes as a world-class research and development function. Buluswar has spoken with Insurance & Technology about working with science and research institutions, such as the RAND Corporation. But as Hancock's statement emphasizes, the role will focus on improving the carrier's analytics acumen.

[To read I&T's Q&A with Chartis Chief Science Officer Murli Buluswar, click here.]

All insurers have made significant investments in analytics, but the creation of the chief science officer role may be an "inflection point" in how insurers use analytics, observes Donald Light, a Palo Alto, Calif.-based senior analyst with Celent. The payoff that insurers get from analytics depend on getting better at skills building deep and accessible data sets, using available tools and balancing enterprise and line-of-business skills, according to Light.

"With the creation of the chief science officer position, Chartis is making a commitment on all three fronts," Light notes. "Other insurers are likely to follow.

By elevating the analytics function to the corporate level Chartis is in line with a recent trend in the broader corporate world, according to Clark Troy, research director, Aite Group (Boston).

"The title 'chief data officer' has been on the rise for some time now in the financial services and corporate world, in recognition that data -- both internally generated and acquired -- is a core asset to corporations," Troy says. "Buluswar's appointment shifts the accent somewhat, emphasizing that the value is not in the data itself, but in what uses may be made of it."

Through the new role, Chartis is affirming that effectively identifying the uses that may be made of data is a corporate rather than a line-of-business or functional area priority. That recognition embodies nothing less than a paradigm shift from insurance as focused on operational and transactional processing to insurance focused on information as its key corporate asset, asserts Mark Gorman, co-founder of Agile Insurance Analytics (AIA, Philadelphia).

"It's the next step in a natural evolution that we've seen in other industries, such as retail and consumer credit," Gorman comments. "Chartis' CEO is speaking of the position as a role that is cross-functional as well as across lines of business at the enterprise level, so clearly the analytical role is becoming a corporate asset as opposed to a functional unit."

Gorman sees the elevation of analytics to the corporate level as an expression of companies' intention to be able to react to market pressures more quickly. He also notes that Chartis CEO Hancock has emphasized customer perception, interaction and insight as a key source of competitive advantage in his references to the chief science officer role.

"Chartis is a leading example here, and I think other insurers will respond to this," Gorman says.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio