PDFs, email, images, voice, and other unstructured types of datacontinue to flow in, out, and around insurance companies and theyare multiplying at a dizzying pace. A startling quantity ofelectronic data, estimated to be more than 1 zettabyte wasgenerated in 2010—the equivalent of 1 billion terabytes.

Now, the really alarming part—the amount of electronic data inthe world is expected to increase at a 60 percent compound annualgrowth rate through 2020. This means that the quantity ofinformation stored in the world in 2020 will be 100 times more thanthe amount stored in 2010. And as mind-boggling as these numbersare, the estimates may be conservative. The explosion of socialmedia and the trillions of devices and sensors being connected tothe Internet will generate increasing amounts of data.

There's no question data sits squarely at the heart of thefuture of information technology. In a way, it is"back-to-the-future" because in the early days of computing, it wasall about data processing.

The insurance business, with its established track record as adata-based industry, will feel the impact of these massive amountsof data more than many other businesses. The challenge will be notonly to capture the data, but also to cleanse it, store it, andintegrate it to work effectively in concert with other internal andexternal data.

The insurance industry has solid experience in managing highvolumes of business transactions. But most of the informationinsurers now need to handle and manage is not the structured,transactional data that has long been stored in traditionaldatabases. The bulk of the data is now unstructured—documentimages, e-mail, digitized voice conversations, PDFs, SMS textmessages, pictures, videos, and a variety of social mediacontent.

Just how well are insurers doing at capturing, storing,managing, analyzing, and capitalizing on this unstructuredinformation? The answer may provide a crystal clear lens into howsuccessful insurers can be in the next decade.

Over the last 12 months, Strategy Meets Action has conducted aseries of research studies and interviews to gain insight into howinsurers are managing information content and leveraging it forcompetitive advantage. This research, based on survey responsesfrom over 500 insurance industry participants and in-depthinterviews with dozens of insurance leaders, probes four keyareas:

• Information: What do the increasingly varied typesof information mean for insurers?

• Capabilities: What current capabilities do insurershave for managing this content? What new capabilities will beneeded to create competitive differentiation?

• Spending and Solutions: Why are insurers investingin IT capabilities for enterprise content management? How much isbeing spent? How well are solution provider offerings addressingthe needs of insurers?

• SMA Call to Action: What steps should insurers betaking to improve their capabilities for managing documents andinformation content? 

The following is a summary of these fourareas:

Information

What do the increasingly varied types of information mean forinsurers?

It's easy to see that the types of information insurers need tomanage are changing over time. An array of communicationoptions—human-based, computer-based, and telephony-based—isflooding our world with new types of information. Each of theseinformation types is relevant for insurers and can impactproductivity, profitability, and service levels. The informationrepresents communications with customers, prospects, businesspartners, governmental agencies, and other third parties.

The days of dealing with only pre-defined data elements andformats are gone. Insurers must be able to accept and manage dataas it comes in no matter what source or style.

Capabilities

What capabilities do insurers have for managing this content?What new capabilities will be needed to create differentiation?

When defining required capabilities, it is essential to look athow business and technology capabilities are synchronized andaligned. The SMA Maturity Model depicts a pathway for three levels:Mainstreamers, Movers, and Masters.

Mainstreamers have baseline capabilities for automation andefficiency. They have automated capabilities to capture and storeall manner of unstructured data. SMA research shows that 81 percentof insurer survey participants indicated that they have thesecapabilities today, while only 19 percent do not capture this typeof information. Most insurers have content management software witha repository to store and manage this information, and a majorityof those indicate that they have multiple content managementsystems in place.

Movers want to stay one step ahead of mainstreamers, one stepbehind the masters, or have plans in place to become a master.Movers practice active management of their content—moving beyondjust capturing and storing the data. According to SMA survey data,48 percent of insurers state they either do not capture informationbeyond the basic transaction data, or they capture document imagesand other content but are not leveraging it. 

Masters are the market leaders in adopting business andtechnology capabilities to create differentiation. Masters havefully integrated their content management systems across theenterprise and have achieved tight integration with customercorrespondence and communications systems. Few insurers haveachieved this level, but many have this vision on the drawing boardfor their future content and communications management systems.

SMA has developed Maturity Models for business functional areassuch as distribution, underwriting, and claims, as well as contentand communications management. Insurers are finding these models tobe of real value in assessing their current position relative topeer groups, and assisting with the development of a roadmap toposition them where they want to be in the future.

Spending and Solutions

Why are insurers investing in IT capabilities for enterprisecontent management? How much is being spent? How well are solutionprovider offerings addressing the needs of insurers?

Many insurers have invested significant dollars and resource inimaging, document management, and enterprise content management(ECM) over the last decade. In the past, the primary objectiveshave been to reduce costs, improve processing efficiencies, anddecrease the floor space required for storage. As a result, manyinsurers believe they have advanced capabilities for contentmanagement.

But today, the explosion of information content, increasingcustomer demands, and the competitive marketplace are requiringcontinued investmrnt in this area. New investments are more heavilyfocused on driving top-line growth. The SMA insurer survey receivedhigh response rates from business users, and highlighted customerservice, customer understanding, and retention as the top threedrivers for IT investment in content and communicationsmanagement.

Across North America, significant dollars are being spent oncapturing, managing, and storing of content. In 2011, SMA estimatesthat insurers are spending $3.4B, about 15 percent of the ITbudget. This spending includes software, maintenance, hardware andstaffing. P&C insurers have historically outspent life &annuity insurers, but recent SMA research shows more aggressivespending plans for l&a companies through 2013.

Over the last 10 years, insurers have invested in operationalefficiency and the reduction of the amount of paper folders,resulting in large scale scanning and imaging operations. Now, inan effort to assist in the automation of decision making, insurersare leveraging the content in areas such as underwriting and claimsprocessing.

There are no shortages of solution and technology offerings inthe marketplace. Over 80 IT solution providers are sellingsolutions to insurers for enterprise content management. Theseofferings include specialized technology, such as image capturedevices, e-signature solutions, or voice technology, as well assolutions that create a hub for all document and contentmanagement.

SMA Call to Action

What steps should insurers take to improve their capabilitiesfor managing documents and information content?

SMA recommends insurers take proactive steps to betterunderstand their enterprise content management capabilities andfind optimal ways to improve them.

• The critical first step is to align technologystrategies for content management to business strategies,identifying the specific business capabilities that will be neededto support the current and future business strategy. Contentmanagement plans should be part of an enterprise-wide strategy forimproving the customer experience across all departments and touchpoints.

• The next step is to examine all existing paperflows, looking for opportunities to improve the associated businessprocesses, and investigating ways to offer customers new optionsfor interaction.

• Next, take an inventory of current contentmanagement solutions and the related IT infrastructureunderpinnings. This helps to determine whether or not current ITcapabilities can be extended, or if new solutions must beinstalled. If new solutions must be acquired/built/installed, athorough evaluation of IT providers with ECM systems will need tobe launched.

• Finally, use a roadmap to give meaning and cohesionto the new opportunities, required capabilities, and plannedsolutions.

So, how well are insurers managing information? From somevantage points, insurers manage information quite well, especiallyfor high volume business transactions in the traditional computingenvironment.

Insurers have been aggressive in imaging, forms management, anddocument management systems for more than a decade, as well.However, there are significant opportunities for improvementregarding unstructured content. All those PDFs, e-mail, tweets andother unstructured content should be managed and mined—providinginsurers that seize the opportunity with increased productivity,customer loyalty, and profitability.

About the Author

Mark Breading, a partner at SMA, is a recognized expertin advanced technologies and their implications for the insuranceindustry. Mark can be reached at [email protected].