Data--specifically customer information--is the lifeblood of the insurance enterprise. Not surprisingly, then, ownership and stewardship of that data is a subject on which many in the industry disagree.
Having heard the arguments over the years, we decided to ask two key questions of an agent and then a carrier's CIO. First, who actually owns the customer data? Second, with whom should that data reside?
"Customers own the data," states Jerry Fox, vice president at James M. King & Associates, Inc., an agency based in Bloomington, Minn. "It's their information, just as in every other HIPAA system. They allow us access to it, but it is their information. In some cases, the agency and the carrier both store copies of that data, but it still is [the customers'], and we are responsible to protect it."
Where, then, should that data reside?
"In my opinion, the fewer places it is stored, the better, because [having it in multiple locations] makes it more difficult to access," says Fox, a former president of the AMS Users' Group. "Being that a majority of agencies are small to midsize--18 to 20 employees and under--that does not allow them to have significant budgets for data security. Carriers have those resources available to provide proper security for the data, and that's where it should reside."
According to Fox, "Future technologies dictate data shouldn't be residing in multiple locations, so agents should not be storing the data." He adds he doesn't believe the insurance industry currently has the technology to allow carriers to be the only entities to store customer data, however.
Assuming the technology does develop and is implemented, Fox says the key is insurers must give agents unrestricted access to the data. If that doesn't happen, he notes, "then I will end up with it" by default.
Data security also is an issue in the debate over where data should be stored. "We need to push the technology to be where we want it to be so [agents] can access the data and not have to store it, because every time there is a copy of the data, there is another place for intruders to get it," says Fox. "In addition, every time you move it, something will be missing, because there are database structure inconsistencies. So, where is the correct data? Something has changed."
While he advocates insurers holding customer data, Fox does see problems with that situation for agents. Sometimes, agents may not be able to access the data, "especially if you no longer have a contract with that company," he explains. "This can be resolved, however. We need industry cooperation carrier to carrier; consistent, solid security; and a means of authentication for all carriers. Right now they are all different.
"Overall," he continues, "there are way too many holes in security for both agents and carriers. Carriers change passwords every 30 to 90 days; how do I keep up with that?"
The solution, he points out, is "an electronic certificate that would authenticate me, even though I don't have a contract with them anymore."
William R. Jenkins, Penn National Insurance CIO and vice president, information technology, takes a somewhat different view. "Technically, the agents (independent agents, I assume) own the data of the book they write," he states. "Carriers, however, view the agent as an 'extension' of them [the carriers themselves] getting to the policyholder. As such, carriers rely on the data collected from the insured in the furtherance of their business.
"In other words, insurers need this data in order to identify properly the most profitable products and most profitable customers and to identify new products and customers, i.e., perform business intelligence," Jenkins asserts. "There has been an ongoing debate for years as to who really owns the customer. A number of carriers believe and act as if they own the customer. This thinking seems to have evolved as carriers began to provide more and more services directly to the insured, including direct billing, policy changes, first reporting of loss, loss control services, and claims analysis. In effect, they are managing the customer experience."
Jenkins also contends direct writers continue to make gains against the independent agency carriers, and this may result in independent agent carriers "seeing the need to become much more protective of their books."
In terms of where data is kept, "the data today, in my opinion, should reside with both the agent and carrier," Jenkins maintains. "Both parties need to understand thoroughly their respective books of business so that cross-selling and profitability targets can take place."
However, he indicates most agents lack the expertise and time needed to do these types of analyses. "They basically rely on their carriers to do these analyses," he observes, adding the critical question is, "What can each party [carrier and agent] do with the data?" TD
